AN ATTEMPT to restore the clergy pension to pre-2011 levels will be made at General Synod this month.
A Private Members’ Motion from the Revd Dr Ian Paul (Southwell & Nottingham), requests that the Archbishops’ Council, the Pensions Board, and the Church Commissioners “work together to find a way to make use of the whole range of assets and resources across the Church to enable the restoration of the clergy pension to its pre-2011 benefit level as soon as possible”.
In 2007, the Synod voted to approval a change in the “accrual rate” for the Church of England Funded Pensions Scheme, so that the full pension was only gained after 40 years’ service rather than 37 (News, 13 July 2007). The motion requested the Archbishops’ Council, “in the event that the pensions climate improves sufficiently, to bring forward recommendations to the Synod, after consultation with the Pensions Board and the Church Commissioners, with a view to restoring pension levels.”
Dr Paul notes further changes to the scheme: in 2011, the accrual rate was extended to 41.5 years, the normal pension age was increase to 68 from 65, and the pension was reduced from two-thirds of the National Minimum Stipend (NMS) to half (News, 16 July 2010). He writes: “This loss of pension has been further compounded by the steady erosion of the NMS compared with average pay. We are now in a situation where many retired clergy are facing situations of genuine hardship.”
Noting the straitened circumstances of diocesan finances, he suggests that it would “not be appropriate to ask for additional contributions from them”. Citing the “significant growth in the overall assets of the Church as a whole”, he looks instead to the Church Commissioners, having calculated that the annual cost of restoring the clergy pension would be 0.25 per cent of their asset base. “This is a change we can make; it is one we should make; and given the overall position, it is now one we must make,” he writes.
The secretary-general, William Nye, has responded with a note citing the 2021 Clergy Remuneration Review, which concluded that “the current level of pension (when combined with the state pension) is adequate”, declined to make recommendations to increase the level of benefits on affordability grounds (News, 25 June 2021).
While Mr Nye’s note acknowledges that, in the last year or so, “there are reasons for thinking that the pensions climate has improved” — the Church’s pension scheme is in surplus for the first time, and the Pensions Board has reduced the contribution rate for dioceses (News, 9 February) — it warns that “the economic climate and its impact on church finances has also changed”. Diocesan boards of finance recorded aggregate deficits of around £100 million between 2019 and 2022 and aggregate deficits of at least £40 million are forecast for 2023 to 2025.
Mr Nye’s note contains attempts to calculate the cost of reverting to the pre-2011 benefit in two scenarios: applied in respect of future service only (“comparatively straightforward”, according to a technical note) and applied retrospectively (requiring specialist legal and actuarial advice).
In the first scenario, it is estimated that diocesan boards of finance would have to make additional annual contributions of between £25 million and £35 million. This, it is estimated, would increase their forecast aggregate deficits by around 75 per cent, “unless mitigated by additional income, for example an increase of around 10 per cent in parish-share contributions, or expenditure reductions which could include reigning back on plans for other elements of the clergy remuneration package such as stipend increases, housing provision or Continuing Ministerial Education.”
In the second scenario, it is estimated that the pension scheme’s liabilities would increase “by somewhere in the region of £0.6 billion to £0.7 billion . . . requiring a new deficit recovery plan to be put in place and increasing the risk of volatility of contributions that would be required following future valuations.”
The note states that “it is the legal responsibility of Responsible Bodies [DBFs] to make the required contributions into CEFPS”. It defends the Church Commissioners’ track record in distributions and warns that, “any additional calls on Commissioners funding would need to be matched by reductions in other planned expenditure”.
The Church Commissioners were wholly responsible for clergy pensions until 1998. (They retain responsibility for clergy pensions earned in service until the end of 1997.) Speaking at a press briefing at Church House on Friday, Mr Nye acknowledged that it “would be possible to change the law as to where that responsibility rests”.
His note also emphasises that clergy will also receive the state pension and calculates that the sum of the two benefits together “exceeds the NMS in the majority, but not all, of the illustrations, but is less than the National Stipend Benchmark in most cases”.
A technical note has also been produced by the Pensions Board. This suggests that an increase in the National Minimum Stipend — the reference point for all starting pensions — would be “a mechanically simpler way to augment pension benefits for those who have not retired”. It also refers to the introduction in the UK of a “Collective Defined Contribution” pension as a possible future model.