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Winners and losers in change to clergy retirement homes

01 August 2014

iSTOCK

SIXTY per cent of the retired clergy who are renting homes from the Church of England Pensions Board will face a rent increase of £60 a year, under reforms to a scheme which, the Board argues, has been "opaque and inconsistent" (Synod, 18 July). Others will enjoy a similar decrease.

There are currently 1200 retired clergy and spouses living in homes rented under the Church's Housing Assistance for the Retired Ministry (CHARM) scheme, which was established in 1983. Over the past few years, about 30 per cent of retiring clergy have joined the scheme.

The rent is based on gross income post-retirement: it does not exceed 30 per cent of this income (25 per cent for those who joined before 2003). The Board says that this is seen as unfair, as it penalises "those who make an effort to improve their financial situation", and means that those who downsize enjoy no rent reduction.

In July last year, it consulted on a number of reforms, including a proposal to move to the "target rent" approach similar to those used by social-housing providers. This is based on a "basket of indicators" including national and regional average earnings, property values in 1999, and bedroom weightings.

In a document published last month, summarising the 275 responses to the consultation, the Board confirmed its intention to press ahead with the reforms. All tenants who begin renting from April next year will be charged the target rent. Existing ones will make the transition gradually: those currently paying less than target rent will see their rent increase by the RPI plus £60 per year; those currently paying more will see it decrease by £60 per year.

It is estimated that 60 per cent of existing tenants are paying less than targeted rent. It could take up to 30 years before target rents are reached across the board.

Under other changes, clergy will be able to reserve a house five years before retirement. Currently, retiring clergy find a house, and the Board, if possible, buys it. Under the revised scheme, the Board would build a portfolio of properties, from which clergy would be able to choose.

The consultation-response document reports that three-quarters of respondents supported the use of target rents for new tenants, but less than half of existing tenants supported the proposal to transfer them to these rents. Concerns were expressed about those living in high-cost areas and those who suffered a loss of income, especially those who were widowed.

In response, the Pensions Board has said that those who suffered a loss of income, who started renting before 31 March next year, will be guaranteed a rent reduction. This guarantee will remain in place for as long as the tenant is in the CHARM scheme.

In its response to the consultation, the Retired Clergy Association called for "complete transparency" about how target rents would be calculated. On Tuesday, a spokesperson for the Board said: "We will be writing to all our tenants over the next few weeksto tell them what their individual rents will be on the new basis,and how these have been calculated."

Last week, the Bishop of Manchester's officer for retired clergy, the Ven. Alan Wolstencroft, highlighted concerns about whether the target-rent system would limit tenants' ability to move to a different, more expensive, part of the country, perhaps after the death of a spouse.

A spokesperson for the Board said: "The new target rent will not make it harder for our tenants to move. We have tried-and-tested arrangements in place to deal with exactly these situations, and they will continue. As is the case now, some areas of the country will still be too expensive for the Board to afford to buy a property."

Mr Wolstencroft also spoke of "great concern that the Pensions Board are trying to outsource the whole of the housing programme, taking it away from any church pastoral insight".

The Board's spokesperson said that it had "no plans to outsource the work it does in providing retirement homes for the clergy. . . This is not a cost-cutting exercise, but is designed to make the best and most sustainable use of the moneys paid by the clergy themselves in rent, by the Church centrally, and by the Board."

 

Pensions Bord celebrates a year of good returns 

THE Church of England's Pensions Board has hailed 2013 as a "very good" year, as its investments outperformed their target once again, writes Tim Wyatt.

Its annual report, which was published on Monday, said that the Board holds funds worth £1.5 billion, and achieved an 18.6-per-cent return on their assets last year, beating their benchmark figure by one per cent.

Over five years, the fund has grown 11.2 per cent, and over ten years it has achieved a 7.1 per cent return. The report states: "2013 was a year of very good returns for equities, with only emerging markets posting a disappointing performance."

The Board's chairman, Dr Jonathan Spencer, said that the deficit on the Church's pension scheme rose only slightly to £293 million, and was on track to be eliminated within ten years.

Last year, the Board provided pensions to 10,118 retired clergy, 2518 former employees of cathedrals, dioceses and other church agencies, and 533 workers with the National Church Institutions. Last year, the number of retired clergy being assisted stood at 9917.

Of the Board's main raft of funds, its "return seeking pool", 85 per cent is invested in stocks of companies both in the UK and abroad, and a further eight per cent in property. Its second, smaller, pool of funds, the "liability matching pool", is solely invested in bonds - 23 per cent of which were corporate, and the rest in government bonds.

The Board reported that it continues to follow the guidance of the Church's Ethical Investment Advisory Group and restricts investment in companies involved in military products, firearms, tobacco, pornography, gambling, alcohol, high-interest lending, and human cloning.

It was also an active shareholder, voting at more than 2000 company meetings, rejecting 70 per cent of remuneration reports at AGMs, and holding 42 meetings with companies on ethical or governance issues.

The Church Housing Assistance for the Retired Ministry (CHARM) scheme, which is proposed to be radically changed (see above), last year rented 1200 properties to retired clergy. The Board also shared ownership of a further 120 homes with retirees, and housed 250 former ministers in its seven retirement homes.

About 70 workers at these retirement homes are currently paid less than the Living Wage, despite a General Synod motion from 2012 calling on National Church Institutions to pay staff the Wage, currently set at £7.65 an hour outside London. The Synod was told at its meeting last month, however, that these workers' pay would be gradually lifted up to the Living Wage, starting in April next year.

Another potential problem for the Board is a fall in donations. The report states that the Board would not be able to meet all of its commitments without topping up its income with donations, so it will be a concern that they have fallen from £653,000 in 2012 to £560,000 last year - a drop of 14 per cent. 

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