A NEW, starker assessment of the Church of England’s pensions position was published this week. The Pensions Board task group suggests that clergy will have to work to the age of 68 in order to qualify for the full pension.
The pensions scheme is currently set up to cover a shortfall of £141 million, determined by actuaries at the end of 2006. An assessment made at the end of 2008 revealed that this shortfall has risen to £352 million. As a consequence, in April the Pensions Board told dioceses that they would need to increase their pension contributions rate from 39.7 per cent of pensionable stipend to 45 per cent from next January.
Two factors have influenced the ttask group’s new proposals: the continuing economic crisis, and reports from the dioceses that they cannot afford to pay 45 per cent.
As a result, the task group has set out a series of proposals to bring pensions back under control: the reduction of the diocesan increase to 42 per cent; the extending of the period needed to accrue a full pension from 40 to 43 years; clergy retirement at 68, not 65, in order to qualify for a full pension; a limit on the annual increase to the pension, and contracting back into the second state pension.
The task group dismisses the idea that Church Commissioners’ investment money could be used to cover the shortfall: this would eat into the amount the Commissioners contributed to church work around the dioceses. Andrew Britton, who chairs the task group, called the moves “regrettable” on Tuesday. “But unless there is a dramatic improvement in the value of the pension fund in the second half of this year, further action is unavoidable.”
The task group wonders aloud whether the present crisis sounds the “death knell” for the existing pensions provision, or whether it is a “particularly violent storm that can be ridden out”. It invites comments between now and 31 October. It will then make recommendations to the Archbishops’ Council to be debated in the General Synod in February next year.