The Church of England Pensions Board issued this statement last month.
The Church of England Funded Pension Scheme valuation
21 January 2014
In response to the claims in the media by Mr John Ralfe in relation to the Church of England Clergy Pensions Scheme, the pensions board has issued the following statement:
John Ralfe’s claim that there is a big hole in the clergy pension scheme is simply inaccurate. At the last valuation of the scheme, on 31 December 2012, the funding deficit was 25%, and we are on target to be fully funded over the next decade. Had the valuation been carried out at the end of 2013, we might have expected the funding deficit to be closer to 15%.
Mr. Ralfe says that the clergy pension scheme’s discount rate was increased by 0.5% without an explanation. The pensions board made the assumptions for the valuation based on their assessment of the strength of the responsible bodies’ financial covenant, the fall in yields on fixed interest gilts, market expectations for future RPI inflation and up to date mortality expectations. The discount rate is in line with advice from an independent actuary and with the requirements of the pensions regulator.
Mr. Ralfe has raised these sorts of issues in the past, but has refused numerous offers by the Church of England Pensions Board to meet to discuss this matter.
Our return-seeking funds have returned 20.8% over the three years to the end of 2012, and provisionally, 27.7% over the three years to 2013, improving the funding position of the scheme.
Mr Ralfe also fails to take into account that, unlike most other defined benefit schemes, this scheme is still quite immature and is still open to new members giving it a healthy contribution inflow. A bond heavy investment policy is not normally seen as either necessary or desirable for relatively immature schemes, and would make them unnecessarily expensive.
Robert Peston, the business editor of the BBC published this article on the same day: An unholy pension hole.
The following day Simon Read wrote in The Independent: Vicars’ retirement savings in jeopardy, says pension expert
John Ralfe has now published an open letter to the Archbishop of Canterbury in the Financial Times: Dear Archbishop, the Church of England is in pension denial and on his website. [Registration (free) required in both cases]
Following Ralfe’s release yesterday of his letter to the Archbishop of Canterbury, the Pensions Board has today issued the letter that it sent in reply; read it here. It goes into much more detail than the press release above.