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Clergy pensions: there is no free lunch

10 March 2010


From the Secretary and Chief Executive of the Church of England Pensions Board

Sir, — My former colleague Chris­topher Daws has suggested alter­native ways in which the clergy pensions package can be modified to make it affordable (Comment, 19 February). It is important to appre­ciate, however, that there is no free lunch here, and costs can be reduced only if benefits are reduced in some way, or gains for one group of clergy are matched by losses from others.

As he acknowledges, the proposal that younger clergy might earn more pension each year than older ones would almost certainly fall foul of age-discrimination legislation. A successful claim against such an arrangement would financially cripple the scheme. There is also the question whether it would be “fair” for two clergy to be earning different rates of pension for the same period of service just because their ages were different at the time.

He makes two other alternative proposals. The first is that the pension should be a lower proportion of the current year’s stipend rather than two-thirds of the previous year’s figure. He suggests going back to the level it was in 1980, which was 63 per cent. This does reduce cost, but only because the benefits are reduced accordingly: for example, a full-service pension at 1 April 2010 of £12,870 (63 per cent of £20,430), compared with one at 1 April 2009 of £13,473 (66.6 per cent of £20,230).

His second proposal relates to abolishing pension differentials for those holding higher office. This is an issue that has been debated in the General Synod on more than one occasion, and, while this would reduce cost, the overall saving is modest (around one per cent in the contribution rate).

(An adviser to the Pensions Task Group)
Church House
London SW1P 3AZ

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