UK – New plans to increase pension contributions, cut benefits and raise the retirement age will be debated by the General Synod on Sunday in a bid to solve the Church of England’s pension crisis.
The threefold plan - unveiled by the Church’s Pensions Task Group earlier this week – aims to address the effects of longevity, low investment returns and government regulation.
According to the group, they “are aware of a strong groundswell of opinion that the church should be looking for a durable solution rather than a temporary fix”.
While the task group also examined the possibility of shutting the church’s defined benefit scheme, it recommended:
- An increase in contributions rates (from 33.8% to 39.8%) from already cash-strapped dioceses amounting to an extra £9.5m a year.
- A cut to clergy’s benefits.
- An assurance from the Church Commissioners to help out if called upon to do so.
- Clergy increase their service years from 37 to 40 before accruing a full pension.
“Taken together, the package would, in our judgment, be likely to preserve the defined benefits scheme for the foreseeable future without the need for radical change,” said the group.
The plan will also see increases in clergy pensions follow the retail price index rather than stipend increases – a move that will bring clergy pensions in line with other pensions, said the Church of England newspaper.
According to secretary Shaun Farrell of the Church of England’s pensions board, “We have concerns about any additional costs to the dioceses.
“We know that some are stretched a bit, but in the past few years quite a few of their financial positions have firmed up. Some are pushed more than others.”
According to the task group, other possibilities include shutting the defined benefit scheme or keeping it open with the Church Commissioners as permanent guarantor.
Should the Synod wish to proceed with either of these, “much more work” would have to be done by the group to assess financial implications not available in its current report, said the church newsletter.
“This latter option is explored only in a preliminary way because its feasibility raises a number of regulatory issues that the group will be exploring over the coming months,” said a statement from the church.
However, if the Synod gives the green light to the group’s recommended plan, a detailed implementation plan would be agreed as early as the first half of 2007.