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Clergy Pensions Consultation June 2009 and Benefits Illustration

Clergy Pensions Scene-Setting Paper from Archbishops' Task Group

Supplement to June 2009 Pensions Taskgroup Report - Benefit Illustrations

Report of Pension Ill Health Benefits Review

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Pensions 2009

September 2009

The report of the Pension Ill Health Benefits Review Group has been sent to dioceses. A link to the report is on the left of this page. Dioceses are asked to comment on the report by 31 October to mark.hodge@c-of-e.org.uk

30 June 2009

The Church of England has today published a second and more detailed report on the impact of the credit crunch and recession on the financial position of the Funded Clergy Pension Scheme.

The report puts forward various options relating to the future of the scheme and can be read here.

The Church of England published a paper on March 5th 2009 on the impact of the credit crunch and recession on the financial position of the Funded Clergy Pension Scheme and what this might mean for the future of the scheme.

The last actuarial valuation of the scheme, carried out as at 31 December 2006, revealed a deficit of £141m. This is currently being eliminated by way of extra contributions paid by the employers participating in the scheme, in addition to the contributions required to pay for future benefits. Some modifications were also made to the scheme in 2007 to help contain costs (see notes below).

The Church of England Pensions Board is the trustee and administrator of the Funded Clergy Pension Scheme, which covers the pension benefits earned by Church of England clergy from 1 January 1998. All pension benefits relating to service before 1 January 1998 are met by the Church Commissioners. The scheme, in total, has around 9,000 active members and 13,000 pensioners.

The Task Group comprises the Chairman of the Pensions Board (Dr Jonathan Spencer), the First Church Estates Commissioner (Andreas Whittam Smith) and the Chairman of the Archbishops’ Council’s Finance Committee (Andrew Britton) assisted by the Chief Officers of the three organisations and the Chief of Staff at Lambeth Palace. Their initial paper is available via the Church of England website here.

A Supplement to this document on Benefit Illustrations has been issued.

Notes

1. The clergy pension scheme operates on a defined benefit (final salary) basis and provides a pension on retirement of up to two-thirds of the pensionable stipend at the point of retirement plus a lump sum of three times the pension depending on the length of service.

2. The current full service pension for parochial clergy is £13,093 pa plus a lump sum of £39,279.

3. There are over 200 individual church bodies who participate in the scheme but 96% of scheme members are sponsored by the 44 diocesan boards of finance.

4. In 2006/2007 the Clergy Pensions Task Group carried out a review of the scheme to explore ways of containing the increase in costs which resulted from the last actuarial review. Following extensive consultations, the General Synod in July 2007 approved a number of changes to the scheme to help contain costs which took effect from 1 January 2008 and applied to all service carried out beyond that date.

• A period of 40 years to earn a full pension (all service before that date was on the basis of 37 years)

• Pension benefits earned after that date will increase annually in line with RPI up to a maximum of 3.5%.

5. The current contribution rate is 39.7% of the pensionable stipend. This equates to c 22% once the value of the housing provided is taken into account.

6. The past service deficit of £141m identified at the last actuarial review in 2006 is being recovered over a 15 year period as part of the overall contribution rate referred to above.