THE “perfect storm” facing the Church of England Pensions Board as it seeks to fund retirement housing should be addressed by drawing on the Church Commissioners’ assets, two clergy bodies argued this week.
The Pensions Board’s “Enabling Choice” consultation warns that the current provision — the CHARM scheme, which enables clergy to rent a property from the Board — has become unsustainable (News, 17 November 2023, 24 November 2023). Its chair, Clive Mather, has referred to a dramatic rise in costs through inflation and interest rates. Demand was said to be “unprecedented” last year (Features, 28 July 2023, News, 13 October 2023).
In its response to the consultation, which ended on Wednesday, the Retired Clergy Association of the Church of England and the Church of England Employee and Clergy Advocates, part of the Faith Workers Branch of Unite, write that the Board’s proposals “represent a radical break in the covenant of care between the Church of England and its clergy as to how they will be supported in retirement . . . bringing fresh uncertainty and anxiety to those clergy who have no other viable means of securing housing in retirement, and fuelling the broader perception among clergy that their ministry is no longer understood or valued by the institutional Church”.
They suggest that the Commissioners “invest through the Pensions Board in the provision of rented housing and also enable the Pensions Board to discharge the current debts it holds so that it can fully fund the future purchases of retirement properties”.
“The Pensions Board should not be seen to be the church body of last resort,” it says. “Adequate pensions for retired clergy must be seen to be the responsibility of the whole church and part of the overall employment package. . . Enabling clergy to make their own choices should not be seen to be an abdication of others’ responsibility.”
Until 2010, funding for the Pensions Board’s retirement housing was loaned from the Church Commissioners. When that arrangement changed, the Board had to borrow the funds on commercial terms from other lenders to buy properties. Currently, 75 per cent of the income that the Board secures from rents goes to servicing debt.
During Questions at the General Synod last November, the First Church Estates Commissioner, Alan Smith, was asked whether it would be “more ethical and profitable for the properties to become part of the investment policy of the Church of England Commissioners”. His response was that any investment made by the Commissioners “needs to be considered in the context of our investment strategy, and taking into account our return target (CPIH+4 per cent), risk profile and a range of other portfolio metrics including overall existing fund composition”.
Investment in CHARM housing had been “reducing as part of a strategy to reduce the Commissioners’ investment focus from over-exposure to the UK residential property market”.
The joint response to Enabling Choice lists an array of challenges facing the clergy, including: “Clergy stipends trailing behind secular pay settlements”, the introduction of a compulsory retirement date, and an increase in the retirement age. Beyond the Church, it notes a “housing crisis”, in which social-housing provision has been “undermined”, and mortgages have become “harder to obtain, with the multiplier on income increasing significantly in the last 25 years”.
In the private-rental market, there is “little hope of securing an assured lifetime tenancy — which the Pensions Board provides”, it warns. “Private sector rentals tend to be relatively short term and subject to uncontrollable rent rises. Also, the sector is diminishing as landlords are having difficulty servicing their buy-to-let loans.”
A key recommendation of Enabling Choice is that clergy are offered advice about retirement planning earlier in their ministry. The joint response argues that, “More than reviews and advice, more money for stipends and pensions is needed to address the problem.” It also raises questions about who within dioceses will be offering such advice and points out that independent financial advice comes at a cost. It also raises concerns about clergy spouses and dependants.
The response includes contributions from individuals.
One stipendiary minister in their mid-twenties wrote: “As far as we are aware for the last five decades stipendiary clergy have been assured by church institutions and those responsible for their pastoral care that living in tied accommodation during service carried with it the promise of ‘being looked after in retirement’ in the provision of an assured rental tenancy in an area of their choice should they not be able to afford any other form of housing.
“The future lack of this promise and reliance on house purchase during ministry will inevitably lead to clergy having less ability to move around the country as needed in future years. Ability to purchase property will require two incomes in a clergy household — this too will be unhelpful to clergy availability. Demand for rented property will also grow as more vocations come from social housing households.”
Concern about retirement provision was a theme of the Church’s recent study of clergy from working-class backgrounds (News, 5 October 2023).
Among the four principles set out in the Board’s consultation is “enabling home ownership during ministry, through overcoming barriers to level the playing field between clergy and their peers”. Proposals include partnership with mortgage providers to offer clergy a mortgage with a loan-to-value ratio of up to 100 per cent.
The joint response describes this proposal as an “exciting one should it be realistic”, but raises several questions, such as whether the financial partners — unnamed — will continue making the offer for long periods of time.
Referring to a focus on offering properties in “more affordable parts of the country”, it warns that these may be “far from the social and support networks built up during ministry”.
The Pensions Board says that, currently, one in six of the retiring clergy needs help with retirement housing, but the joint response suggests a figure of between 20 and 25 per cent. It warns that the Board’s “safety net of rented housing is going to have to be larger than all of these pages envisage. What about a Churches Mutual Housing Association?”
It concludes: “The response will always be that there isn’t enough money, but that does not overthrow the principles involved and those principles should be the guiding light in any reform.”
Response to the consultation should be made by Wednesday 31 January at: churchofengland.org/resources/clergy-resources/retirement-housing/enabling-choice