Thursday, 5 March 2009

CofE pensions: a scene-setting paper

A Church of England press release today is titled Update published on Clergy Pensions Scheme.

The Church of England has today published a paper 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…

There is also a paper from the Task Group:

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. (.doc file)

And it is also available as a more accessible web page at Scene-Setting Paper from Archbishops’ Task Group.

Posted by Simon Sarmiento on Thursday, 5 March 2009 at 1:33pm GMT | TrackBack
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Comments

Anyone not see this one coming?
If the last shortfall was 140 million, then the review at the end of this year could easily show a 500 million deficit.

All they have to do now is remove the compulsory retirement age and let us old sods die in post at evensong, rather than throwing us out of our homes and our communities when we 'retire' and carry on working for them for free.

Posted by: dodgey_vicar on Friday, 6 March 2009 at 8:33am GMT

"All they have to do now is remove the compulsory retirement age and let us old sods die in post at evensong, rather than throwing us out of our homes and our communities when we 'retire' and carry on working for them for free." Dodgey_Vicar

Well, Vicar, you could always move with F.i.F to Rome, where they are used to working until death without very substantial recompense.

Posted by: Father Ron Smith on Friday, 6 March 2009 at 10:02am GMT

Extraordinary how little comment this has attracted.

First, to respond to DV, 141 million is not a lot of money and is two-year-old news. To break it down, 141 million is a pound per week for every person in Church on Sunday over less than two and a half years. And they are taking 15 years to make it up. That's around 18 pence per parishioner per week. And you are very probably right about the sort of direction to look for in this year's evaluation, which should be ready roughly summer 2010 or so, I imagine.

Second, I note the paper suggests that cutting pension amounts by formula would affect clergy morale, but then they go on to suggest holding down the increases in stipends. If I know clergy, their morale will be affected much more by the restraint on stipends than pension cuts, though I would not advocate the latter, either.

Third, I note the current contribution rate of nearly 40%. That is an extraordinarily high price to pay for a pension. And they are suggesting that an expected deficit, in the absence of a spectacular recovery in stock markets this year, could push the contribution rate to 60%??!

Consider: if they could get the rate down to a more reasonable 20%, assuming salary sources can afford the current rate that means they could afford to increase stipends by about 20% across the board. Imagine what that might do for morale.

I would hope that the task group consults with the pension authorities in other Provinces to see what they are doing and how they run their pensions. There may be some useful ideas out there.

The salary, pension and benefits, housing and general working conditions of clergy are extremely important issues for the Church. Clergy are the highly-trained, highly-motivated paid professionals who, like it or not, drive much of the mission of the Church. That is not to ignore the immense contribution of talented, committed lay people, but this is about clergy today. If the clergy are well treated, live in decent surroundings and earn enough to live decently they are more likely to remain satisfied and motivated in their jobs. But if life is a constant struggle, living on poor wages in substandard housing with abusive working conditions, morale and mission will suffer.

So, I appeal to lay people reading this blog: ask yourself how close to the average salary in your area your priest is paid; ask yourself whether your priest's family lives in average or substandard housing for your neighbourhood; ask yourself whether your priest is treated like an educated professional in your context. Then, where necessary, go out and make a difference for your priest. Fight in your parish and diocese for decent and just wages, benefits, living and working conditions.

(And yes, I know that some will want to respond that their vicar is a worthless slug who gets more than he deserves. But please refrain from such responses today. Let's assume for just a moment that we are talking about human beings who deserve as much dignity as you would claim for yourself.)

Posted by: Nom de Plume on Friday, 6 March 2009 at 1:20pm GMT

Nom de P: "But if life is a constant struggle, living on poor wages in substandard housing with abusive working conditions, morale and mission will suffer."

Poor wages, substandard housing and abusive working conditions are, however, common to many of the people amongst whom the clergy work, though, aren't they? Writing as an NSM who worked as a teacher in the very expensive South-East of England for many years, it always struck me that full-time clergy friends did very well for themselves by comparison: a four-bedroom house and no council tax are very substantial perks in areas where property prices are high.

Of course I think that full-time clergy should be treated well, but maybe there should just be far fewer of them? Roman Catholics in the UK manage (just about) with a much lower proportion of priests per Mass-goer, and they don't even have any NSMs or lay readers. I don't think they get a stipend or a pension scheme either, do they?

RIW will no doubt be able to enlighten me here.

Posted by: Fr Mark on Friday, 6 March 2009 at 2:11pm GMT

NdP raises some important points, I appreciate in particular the call for generosity among congregations.

There are two areas on which I would like to comment.

NdP is concerned about the contribution rate, at 40% being very high. The main reason for not being able to compare this figure sensibly with other Defined Benefit schemes is the fact that clergy in stipendiary service receive a house. This effectively depresses the stipend figure (were clergy required to provide their own accommodation the stipend would need to be at least 8-10K higher in UK currency - and hence the same pension would be a smaller percentage). Also clergy in retrement often have housing costs (rent or mortgage) to meet whereas most people in DB schemes in the UK have paid off a mortgage and may well be able to release capital by downshifting to a smaller house than they needed when raising children.

By the time you've taken these factors into consideration you are down to something much closer to the 25% mark.

NdP also argues that clergy morale would be more improved by higher stioends than by a secure pension. If this is true it is in contradiction to such surveys as have been undetaken as part of pensions policy reviews in the C of E. The evidence there was an acceptance of less stipend now for the sake of keeping the DB scheme going.

I'm a member of the Pensions Board and happy to note any comments on this or related threads.

+David

Posted by: David Walker on Friday, 6 March 2009 at 4:54pm GMT

Nom de Plume said "I note the current contribution rate of nearly 40%. That is an extraordinarily high price to pay for a pension."

The 40% is of the standard stipend, which is rather more than £20k. When the value of free housing in good sized properties, free maintenance, no council tax, no pension contributions etc is added in, the value of an equivalent lay salary is probably well over £30k (well over average UK earnings), which reduces the pension percentage to c25%. This is much closer to the total paid by employees and employers in most commercial defined benefit schemes.

Cutting the contribution rate in half to 20% would significantly reduce the pension actually paid in retirement. After 40 years service the full pension is only £13k a year (and many clergy don't serve 40 years). Would you want retired clergy to have to live on less than say £7k a year?

Posted by: Ian C on Friday, 6 March 2009 at 10:00pm GMT

Fr Mark:

"Poor wages, substandard housing and abusive working conditions are, however, common to many of the people amongst whom the clergy work"

Yes, they are. They are no more right or just for the parishioners. Nor do these conditions justify inflicting them on clergy, either. The Church should, in my view, be an exemplary employer. It is, in my experience, a very poor employer. Clergy should not expect to become rich, but it is surely reasonable that they should be able to live decently. When a clergy family lives below the poverty line as a norm (and that is the case in some places I know of) then it is a real problem.

"a four-bedroom house and no council tax are very substantial perks in areas where property prices are high"

A vicarage is a bit of a two-edged sword. The house is, of course, in lieu of cash salary, and comes with no choice of accommodation. What if the vicar doesn't particularly need or want four bedrooms? Clergy who live in church-supplied housing are kept people who are at the mercy of the parish with respect to house maintenance ("Sorry about the leak in the roof, vicar; how about a bucket?")They also automatically lose their homes if the cease working for any reason, whether retirement or long-term disability. ("So sad about the road accident, vicar. You will be moving out soon so we can get a new vicar, won't you?") And not having to pay council tax is not a subsidy for the cleric; it's a subsidy for the parish. The tax break allows the parish to get away with paying a lower cash stipend than they would otherwise have to pay in order for the cleric to pay the tax, and still maintain a viable lifestyle.

The RC clergy I know do receive a stipend, tho' much smaller than Anglican stipends. I don't know about pensions, but they do receive housing for life. Unlike Anglican clergy, the RC's are not turfed out on the street when they retire.

Posted by: Nom de Plume on Friday, 6 March 2009 at 10:16pm GMT

Just a brief comment on the working conditions thing. I too came into the dog-collar after a life in the "real world". Most of those with whom I taught (in "the gritty north east") will retire with their houses paid for by the ludicrous increase in house prices these last thirty years. I made a profit on the one house we 'owned', most of which went into supporting us while I trained.

It strikes me that the problem is that there is no such thing as 'typical stipendiary'. Those of us of riper years were ordered to sell our houses (this was the case as recently as the early 90's) when we went off to train. There are others for whom the clerical income is a pleasant 'second earner' alongside a 'proper wage' from a (usually male) partner, and the former marital home is rented out. There are very well-positioned stipendiaries and very badly placed ones, good dioceses and bad dioceses from the point of view of pastoral care and housing. Vague generalisations from either inner city Northern Parts or stockbroker Surrey cloud a complex picture.
FWIW I think the job's will probably cost me about a quarter of a million compared with my staying in teaching.

Posted by: mynsterpreost (=David Rowett) on Friday, 6 March 2009 at 10:23pm GMT

I have been struggling a bit about whether to reveal much about myself, as I have appreciated the anonymity of my Nom de Plume here. I will say this much: I am a priest in the Anglican Church of Canada, formerly an IT professional. I have served on my diocesan clergy remuneration committee, and now serve on the General Synod Pension Committee. So I know one or two things about the topic, but from the other side of the pond, as it were.

The Canadian scheme is a career-average plan that earns 2% of salary each year. I am looking at a final pension on the order of 20,000 pounds after 34 years of service. For that my parish pays about 18% of my stipend and I pay 6.6%. The aggregate is obviously rather less than 40%. Though it is about the 25% quoted by Ian C. But it is 25% of stipend, and not 25% of salary-including-housing.

Like mynsterpreost it has cost me quite a bit to take this job. A conservative estimate to date is over $1 million. (That's over 550,000 pounds). And that doesn't include the lost income over the next 20 years before I retire. Count on another half million pounds or more.

I do not propose to cut the cost of providing pensions at the cost of cutting pensions. What I suggested in my comment was that the cost seems very high. Compare my figures.

And I return to my theme: the way in which we treat the clergy from the perspective of salary, benefits, housing, working conditions and retirement is a matter of morale, mission and justice.

Posted by: Nom de Plume on Saturday, 7 March 2009 at 2:48am GMT

I am sure clergy want to keep the DB pension because you at least know where you stand-just think of those retiring now on a pension from a money purchase scheme.I take the point about the "typical stipendiary", as clergy circumstances are now very different and the housing situation complicates things further.I hope that the worst scenario will be that the DB is kept but perhaps its benefits decreased-down to 60% of minimum stipend perhaps.But what about demographics-with the age at ordination at 40+ most new clergy will only clock up 20-25 yrs??.

Posted by: Perry Butler on Saturday, 7 March 2009 at 1:56pm GMT

From across the pond, NdP claims that CofE clergy are turfed out on the street when they retire. Yes, stipendiary priests have to leave their current residence so their successor can move in. But if they have not already made provision for retirement housing (as the Church encourages them to do during working life), the Pensions Board will provide them with subsidised rented accommodation or some form of joint ownership of suitable property. These arrangements (CHARM etc) cost the Church (=parishes) several millions of £££ each year, and even more in grants to provide sheltered accommodation and nursing care from charitable funds.

Posted by: Ian C on Saturday, 7 March 2009 at 5:28pm GMT

Yes but most Church of England ordained clergy have families to support. However with all the perks, (Council Tax paid, clergy private hospital, reductions in school fees and many with working professional wives) etc, it's no wonder that Forwatd in Faith and Reform do not want to defect.

Posted by: Robert Ian Williams on Sunday, 8 March 2009 at 12:57pm GMT

I hate to sound as if I'm being weaselly, but does anyone remember the CofE report 'generosity and sacrifice'?

If I remember correctly, the formula for assessing a correct level of stipend was something like this - start with the basic pay of a primary school head (at that time about £36K - I believe that represented a very small primary), deduct the value of housing, council tax, non contrib. pension, etc (about £10K a the time) and then - wait for it - a 'compulsory sacrificial element' of £6K. Most dioceses declared themselves unable to pay the end figure anyway, so it was a fairly pointless exercise. But with a bit of luck, recalling that process does give a context for some of the observations about CofE stipends.

With regard to the 'making provision' comments which were floating around at that time - that did cause outrage among some of us, who were specifically ORDERED (yes, ordered) to sell our houses on entering residential training so that we would be able to do more in the way of supporting ourselves while at college. Perhaps those who spoke with curled lip about the feckless clergy had forgotten that our fecklessness was in response to their commands?

(For the record, I feel very well off on a single stipend with a non-gainfully employed wife.)

Posted by: mynsterpreost (=David Rowett) on Sunday, 8 March 2009 at 3:19pm GMT

Whilst some Reform congregations could provide for their clergy ( and even here the clergy would take a drop in standard of living), I know of no FIF one that could do so, once they were stripped of their endowments. As with the Vicar of Bray its all about money and status.

The future for a FIF denomination is what happened in a town close to me. A disused Methodist chapel, with four old ladies and two priests!

Posted by: Robert Ian Williams on Monday, 9 March 2009 at 6:24am GMT

Please RIW could we concentrate on pensions, on this thread, and leave any comments about FiF etc. for elsewhere. Thank you.

Posted by: Simon Sarmiento on Monday, 9 March 2009 at 8:17am GMT

I am so glad the literature from the C ofE Pensions Board is so clear about the rights in Law of the civil partnerships of clergy. They just need to get real and get generous with the terms.

They are still discriminatory.

Posted by: Rev L Roberts on Wednesday, 11 March 2009 at 8:13pm GMT

NdP, the key driver may be the actual level of stipends in Canada and in the UK - are your stipends of a higher value? (I'm assuming you're also on a guaranteed benefit plan rather than a money purchase scheme - that would also make a major difference.) The CofE numbers make sense within the context of contributions required for other UK pension schemes. As Ian points out, this is a zero sum game: we have to decide how to split our resources between stipends and pensions.

Posted by: Stuart on Wednesday, 11 March 2009 at 8:52pm GMT
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