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Response to 'misconceived' article in Financial Times regarding the clergy pension scheme

3 November 2009

 

An article in today’s Financial Times, headed ‘Vicars’ pensions under threat as church is seduced by equities cult’, is misconceived and fails to take adequate account of the scheme’s relative age compared to other schemes, says Dr Jonathan Spencer, Chairman of the Church of England Pensions Board:

“The scheme concerned is responsible for paying pensions in respect of clergy service after 1 January 1998. The fact of the matter is that this scheme remains quite ‘immature’ in pensions terms, with approximately £70m coming in each year to fund future pensions, and only around £12m going out. So the scheme’s main liabilities are some way in the future. With this in mind, we have acted at all times in accordance with mainstream actuarial and investment advice given by the Board’s professional advisors. This advice has consistently been that the Board should place the scheme’s investments in equities and equity type investments, which have historically produced the best returns.

“Even taking into account the sharp fall in share prices as a result of the credit crunch last year, over the 30 year period up to the end of 2008 investments in UK shares returned an average of 7.1% p.a. compared with gilts (government bonds) which returned an average of 5.6% p.a.

“One independent pensions consultant is quoted criticising the scheme’s investment policy, but  it is totally incorrect to suggest that our policy in investing in the highest performing long term assets was contrary to widely shared practice in relation to ‘immature’ pension schemes.

“While we are realistic about the challenges facing the clergy pension scheme, we have already taken a range of actions to manage these with a programme of diversifying our investments to include holdings in property unit trusts, corporate bonds and currency management. Other alternative investments are being examined as a way of spreading risk.

“The consultation on proposed changes to the clergy pension scheme concluded at the end of October, and in light of that, recommendations will come forward to the General Synod in February 2010 so that the wider Church can be involved in discerning how best we handle the consequences of major market downturns, increased longevity of our members, and increased regulation.

“We have every confidence that all our future commitments can be met. Parishioners and clergy should not be concerned about sensational stories that paint a misleading picture of our past policies in relation to other comparable schemes.”