Church of England clergy pensions need cash boost
UK – Increased life expectancy among the Church of England (C of E) clergy is driving up the contribution rate to maintain current levels of pension benefits. The church needs an extra £12m a year to cover the retirement costs of the clergy’s pensions scheme, according to its interim actuarial review.
The three-yearly report shows that the contribution rates need to be raised by 7.2 percentage points from April 1, 2002. To sustain the current level of benefits this would increase the contribution from 21.9% of pensionable pay to 29.1%.
Another factor in the less favourable conditions for investing says the C of E, this is despite its “excellent” recent investment returns, which will allow it to make available £2.5m for sustainable distribution from next year. The investment returns of the fund have increased ahead of the FTSE All-share Index in its first three years, but there has not been time to build surplus enough to offset the market volatility, says the scheme.
A smaller factor relating to the clergy pensions scheme is that pension benefits increase as clerics’ pay increases, and their pay has risen at a higher level than expected when the fund was set up.