Clergy pensions: Pension age to be 68, and accrual period 41½ years

by
14 July 2010

THE Synod has agreed to make changes to the clergy pension scheme, including increases in pen­sionable age for future service from 65 to 68, and in the accrual period from 40 years to 41.5.

It agreed to equalise the pension rights of civil partners with those of spouses; and said that “standard ill-health retirement pension should be based upon years earned without reduction for early payment plus graduated enhancement calculated according to years of service.”

It agreed that the clergy scheme should be contracted into the state Second Pension Scheme, and that the full pension from the clergy scheme should therefore be reduced from two-thirds of national minimum stipend (NMS) to half, for future service. And it agreed that the Cen­tral Stipends Authority should adopt a policy that the NMS should in future increase on average in line with annual changes in the Retail Prices Index (RPI), subject to the need to review the position if high levels of inflation established them­selves, and also once the deficit on the pensions fund had been cleared.

It also invited the Deployment, Re­­muneration and Conditions of Ser­vice Committee (DRACSC) to con­vene a small working group to consider the effect of the recom­mendations.

Introducing the debate, the Bishop of Ripon & Leeds, the Rt Revd John Packer, said that the clergy had been consulted about the pro­posals, made by the Archbishops’ task group on clergy pensions and DRACSC, to change either pension funding, or benefits, or both.

The task group and the DRACSC felt that there would be only two rea­sons not to go ahead with the pro­posals: either there had been a change in the financial considera­tions, or the consultation had “changed the balance of the argu­ment”. Since then, there had been only “some fragile recovery” in the economy and in the stock market, and equities were now at levels at which they had been in 1998 when the funded pension scheme had begun.

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The pension-contribution rate was likely to be no more than 39 per cent, which, together with the employer’s contribution of a second state pension, would bring this up to 42 per cent. There was a need to discuss a possible hybrid scheme.

Of the 16 per cent of members of the pension scheme who had re­sponded to the consultation, most had agreed to the proposals, which included the clergy scheme’s con­tract­ing into the Second Pension Scheme, stipends increasing in line with annual changes in RPI, and changes to pension entitlement in cases of ill health of the surviving civil partner or a clergy spouse.

The respondents had disagreed with the extension of the accrual-period years. This was regarded as “unfair”. Clergy would have to start their first curacy by the age of 24, if they were to receive a full pension. In response, the committee proposed to reduce the accrual period to 41½ years. That reduction would cost dioceses 1.2 per cent.

Canon Robert Cotton (Guild­ford) suggested that the hybrid scheme had not yet commanded wide­spread support. He was con­cerned about the phrase “while con­tinuing to ensure adequate retire­ment income”. He asked: “Should we not rather be saying: ‘We will do our best to provide . . .’?”

James Humphery (Salisbury) said the proposals did not close the issues of what the limits were and what was affordable. The proposals were a “salami-slicing away of the benefits due to our hard-pressed clergy”.

Barry Barnes (Southwark) be­lieved that there was a need to look again at differentials in stipends.

The Revd Dr Philip Plyming (Guildford) contrasted the Synod’s overwhelming endorsement of the changes (95 per cent for; five per cent against) with the view of the wider Church, where more than 3000 clergy could not support the present proposal. The proposal reforms dis­proportionately affected younger clergy: “The changes affect most of those whose voices have been heard least and whose vocations we wish to foster.” He urged the Synod to oppose the proposals.

Canon Simon Butler (South­wark) moved an amendment that called for a working group to look at the impact this would have on the clergy and on the wider mission of the Church.

Prebendary Stephen Lynas (Bath & Wells) said that the situation was not fair at the moment, because some clergy families were being asked to pay, and some were not.

Tim Hind (Bath & Wells), vice-chairman of the Pensions Board but speaking in a personal capacity, said that failing with this motion would mean that the Pensions Board would have to maintain existing benefits, but that was untenable. It would hasten the closure of the defined-benefit pensions scheme.

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Canon Butler’s amendment was carried by 137 votes to 120 with 20 recorded abstentions.

Prudence Dailey (Oxford) invited the Synod to reconsider the decision it made regarding civil partnerships, and she asked how much it would cost. “By passing this, we are saying civil partnerships are the same as marriage.”

The Bishop of Dudley, the Rt Revd David Walker (Southern Suf­fra­gans), said that the issue was neg­ligible in actuarial terms. He urged Synod members to support the main motion.

The Revd Dr John Hartley (Brad­ford) said there was an elephant in the room: pensions were “a huge elephant eating the Church of England”. He said that he was in favour of a defined-contribution pensions scheme.

The Synod voted to endorse the recommendations in GS 1780, para. 31, as amended by Canon Butler’s amendment.

The Chairman of the Church of England Pensions Board, Dr Jona­than Spencer, moved a series of legislative motions to give effect to the Synod’s endorsement of the changes.

The Revd Moira Astin (Oxford) pleaded that “next time when we do it” — change the pension scheme — “can you leave the accrual period the same?” Otherwise, it could take 45, 50, or even 55 years to achieve a full pension.

Paul Hancock (Liverpool) wanted assurance that the changes in the standard ill-health retirement pen­sion — which, the Synod had been told, “should be based upon years earned without reduction for early payment, plus a graduated enhance­ment calculated according to years of service” — would not affect the criteria. Dr Spencer assured him that “there is no intention to change the criteria as they currently stand.”

There was also some concern over the payment of pensions to the surviving civil partner of a cleric, a decision taken in principle by the Synod in February, but now needing to be confirmed.

The Revd Rod Thomas (Exeter) said that there was no need for such provision. “We are voting to give money to people who may not need it from a fund that certainly does not have it.”

Dr Hartley said that the parallels between widows and the remaining partner of a civil partnership could not be made historically, because the widow’s pension was made in recog­nition that she might not have been able to accrue pension rights because she had been bearing and rearing chil­dren instead of going out to work. “To argue that civil partners are the same as widows is wrong at a biological and historical level.”

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John Ward (London) said that his civil partner was “my rock. . . I want to see out my earthly days with him.” People who had been in that sort of relationship could understand the desire for their partner to receive their pension after they had gone. He urged the Synod to support the new regulations.

Canon Alma Servant (Manches­ter) said that the Synod in February had “done a good thing”. As for whether a person who had been in a civil partnership needed the money, “we don’t make that judgement on married people.”

The Revd Eva McIntyre (Wor­cester) said that she had in February been “so proud of my Church. . .

We had for once stood with the marginalised.” She urged the Synod to vote in favour of the pension changes.

The Synod was told that there were currently seven pensions being paid to the partners of those who had been in a civil partnership.

Bishop John Packer had, when introducing the debate on pensions, said that in February the Synod had been given a “tentative” estimate that such pensions would cost about £58,000 per case. The Pensions Board’s actuaries had subsequently said that the impact on the funded pensions scheme would, over time, be “negligible”.

All the legislation was voted on and carried.

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