THE SYNOD debated pensions on Tuesday afternoon: the proposed changes to the clergy pension scheme arising from the financial crisis; and ill-health retirement.

The secretary and chief executive of the Pensions Board, Shaun Farrell, presented the Synod with graphic evidence of the “drastic plunge” in share prices, which had led to a steep worsening of the Clergy Pension Fund between 2007 and 2008, when a shallow improve­ment had been planned for. Despite an improvement in share prices, they were still “significantly below” their value at the time of the Pension Fund’s previous valuation.

The Church Commissioners’ payments of pensions would peak in 2020, and then decline to a “low level by and around 2060” (by which time all the members would have died, it was assumed). In total, paying pensions would have cost the Commissioners 40 per cent of their capital base, “finance that has gone for ever”. By 2028, payments from the new funded pension scheme would overtake payments made by the Church Commissioners. That fund was still “some considerable way away” from where it needed to be to recover from its deficit of £350 million in December 2008.

The Bishop of Ripon & Leeds, the Rt Revd John Packer, spoke about the proposed changes to the pension scheme needed in order to deal with the deterioration in the pension funds and “stabilise” the scheme. When the funded pension scheme had been introduced, the contribution rate was 22 per cent of the minimum stipend; it was now 45 per cent, and, if nothing was done, it would be “well over 50 per cent next year”. “That is unsustain­able given all the other financial needs that parishes and dioceses have to meet, including maintaining stipends at reasonable levels.” The Pensions Regulator had to be persuaded that the deficit recovery plan “is prudent”.

Four changes were proposed. The first was to contract back into the second state pension, which would enable retiring clergy’s occupational pension from the Church to be reduced.

The second was to cap future increases in the national minimum stipends, on which pensions were calculated. It would increase in line with the Retail Price Index, al­though actual stipends might increase above that rate. It meant that pensions would not increase as fast as they would otherwise have done. The two other changes involved moving the pension age from 65 to 68, and the accrual period for a full pension from 40 to 43 years. “Clergy will need to work longer and retire later” to get a full pension. Both changes applied only to future service after the date of the change, which was proposed for 1 January 2011.

Sue Johns (Norwich) was concerned about how the Church treated its lay staff. There was a “misconception that clergy are hard done by in comparison with the laity”. While the Church needed to be an excellent employer, there was a need to recognise what lay people faced. Since the average age of the congregation was 61, “many of us are fast approaching, or are already retired.” Many of the laity were considerably worse off than the clergy. There was a limit to their often diminishing resources. People were getting to the point where they could not do more. The pension changes needed to be “set in the context of what is achievable”.

Alan Cooper (Manchester), chairman of the diocesan board of finance (DBF), said that he had reached the age at which he had become “an actuary’s nightmare: people who stand up when they shouldn’t be standing but lying down”. The DBF “cannot contem­plate a 50-per-cent contribution in 2011. It is beyond the capability of what we want to do.”

He said that the “siren voices” who wanted the Church Commis­sioners to “bail out” the fund “must be resisted”. In the northern province, two-thirds had said that they were in favour of a hybrid scheme [that combined defined-benefit and defined-contribution elements]. The issue would be back in the Synod in three or four years’ time.

The Revd Dr Philip Plyming (Guildford) said that his pension arrangements were “entirely in the hands of the funded pension scheme”. The pastoral consequences of the changes had not been adequately discussed or understood. He had accepted that by going into ministry he would earn less than those with whom he had graduated, but there had been from the Church a commitment that he would be housed and receive a pension. That “implied covenant between clergy and Church” was now at stake.

Canon Jonathan Alderton-Ford (St Edmundsbury & Ipswich) said that he had been in a parish where “I was one of five people who had an increase.” He was also embar­rassed when he considered the sacrifice of one professional couple, who had both had good pension schemes, and who had given up their financial security to be ordained. “We must honour them.”

Why has God brought the Church to this place? “Finance and the lack of it sits behind many decisions we make.” They did not have the confidence to put their trust in God, and God did shower his blessings upon people; this he knew personally.

Professor Helen Leathard (Blackburn) suggested that the clergy, as they approached 60, might be willing to take a part-time con­tract in which they could continue to build up pension rights.

The Archdeacon of Malmesbury, the Ven. Alan Hawker (Bristol), said that he had been ordained at the age of 24. Under the proposals, no one over 25, when ordained, would receive a full pension, and those aged 27 would have to go on working until they were 70 to get a full pension, and only if they con­tinued to work in full-time employ­ment with the Church.

Stephen Barney (Leicester) moved an amendment that, “from a date to be determined, all new clergy will be admitted to a defined-contribution scheme.” He said that there was “no logical reason” why a defined-contribution scheme was riskier than a defined-benefits scheme. The average age of ordinands was 40, and many would already have pension rights and houses. One survey showed that 80 per cent of the clergy owned property with no mortgage. He did not think a hybrid or defined-benefit scheme was realistic.

Tim Hind (Bath & Wells), the deputy vice-chairman of the Pensions Board, speaking personally, said that it was “with deep regret” that the proposals were being brought before Synod.

Canon Stuart Currie (Worcester) wanted “solidarity” among the clergy. Deferred contributions would mean that people would be receiving different rates of pensions.

The amendment was lost.

Gavin Oldham (Oxford) moved a motion that would lead younger members of the pensions scheme to accrue their pensions faster, and the older members to accrue them more slowly, “which is what happens in many pension schemes”.

The Archdeacon of Berkshire, the Ven. Norman Russell (Oxford), said it was with a very heavy heart that he had supported the proposals brought to the Archbishops’ Council. But “it was a matter of arithmetic.” The younger clergy who would give the whole of their working lives to the Church needed to be given “serious consideration”.

Canon Simon Bessant (Sheffield) said that not all who came to the Church’s ministry late in life were well off. One ordinand he knew had lived on a council estate, and when he became a curate he had far more money in the bank than he had ever had.

The amendment was lost.

Canon Robert Cotton (Guild­ford) moved an amendment in which he asked “the Archbishops’ Council to consider the preparation of a report which describes and explores the overall clergy remuneration package”. He said that the covenant between Church and clergy — “the package of expecta­tions” — was changing, and it needed to be examined if there was not to be a loss of morale. What would it mean to have a defined contribution scheme, he wondered. Was the Church saying that it would provide for your retirement or that it would contribute to it. “That is different, and needs to be ex­plained.”

Moving either to a hybrid scheme or a defined-contribution scheme “would be a major change with deep symbolic significance to the clergy in the schemes”.

A procedural motion to adjourn the motion was put by James Humphery (Salisbury) because, he said, he feared “the death of the pension scheme by a thousand cuts”. He believed that not enough had been said about the consequences of the changes “in pounds and pence”, and asked for models to be prepared for the next Synod meeting in July which would give “some indication of what it means in practice”.

The Bishop of Ripon & Leeds, replying, warned that the timetable required a decision that day in order that the 60-day statutory consulta­tion with pension-scheme members could begin. Each would receive a personal assessment of his or her situ­ation. The changes would then be confirmed in July and acted on in October, so that they would take effect on 1 April 2011.

“If not, the Pensions Board will have to set a rate at the present arrangement, and that will be well over 50 per cent.”

The procedural motion was lost.

The main motion was carried by 273 to 14 with 8 recorded absten­tions. It read:

That this Synod:

(a) endorse the recommendations at paragraph 2 of GS 1758, subject to the necessary statutory and other consultations that the Archbishops’ Council now needs to conduct; and

THE SYNOD went on to debate pension matters with regard to ill-health retirement.

The Bishop of Dudley, the Rt Revd David Walker (Southern Suffragans), moving the motion, said that the present clergy scheme was a very generous provision, but had not always led to the best overall outcome for individuals and the Church.

The scheme could work against good stewardship, and, by providing the most generous benefit to those with the least service, raised questions of equity of treatment, something increased by changes to the Disability Discrimination Act.

The Archbishops’ Council report had four key recommendations. There should be a rigorous applica­tion of occupational-health stand­ards at selection and first appoint­ment; and an agreed national minimum standard of occupational health provision.

The capability procedure should become a necessary preliminary to any application for ill-health retire­ment. Future ill-health benefits should be more closely related to length of service.

The Archdeacon of Newark, the Ven. Nigel Peyton (Southwell & Nottingham), wanted to encourage the vigorous assessment of ordin­ands at selection and first appoint­ment. Early occupational-health review in curacy training was helpful to clergy and bishops in avoiding a mismatch.

Janet Bower (Bradford) also spoke of the value and importance of occupational health. She was concerned, however, that the Bishop of Dudley had separated pre-existing health conditions from those with a disability, and regretted the causal link he had made with the Disability Discrimination Act.

Canon David Miller (Truro) welcomed the ambition of the report, not just to prevent illness, but to help the clergy to return to work.

Dr Jamie Harrison (Durham), advocated regular checks with a GP rather than the increasingly sophisticated checks that detected apparent abnormalities.

The Bishop of Brixworth, the Rt Revd Frank White (Peterborough), commended the occupational-health possibilities, and warmly welcomed the document as related to the wel­fare and morale of clergy as a whole.

The Synod:

(a) endorsed the recommendations at paragraph 1 of Clergy Pensions: Ill-health retirement (GS 1759);