Pensions: now clergy are at risk

12 April 2012

GOD is about to clash with Mammon as Britain's 25,500 vicars become the latest victims of the pensions crisis. The increasingly hard-up Church of England is considering scrapping its final salary scheme for the clergy.

Talks on the future of the plan have been prompted by an actuarial valuation of the fund showing that contributions would have to rise substantially to prevent retirement benefits from dramatic cuts. But asking parishioners to make up the shortfall has been ruled out.

'We would be looking at about £11m extra each year spread across one million churchgoers,' said a C of E spokesman. 'That doesn't look possible, so the Church is examining the fund and what it can pay.'

The pension scheme may suffer a deficit because of likely lower investment returns together with the increased life expectancy of the clergy.

Though some pension benefits are still paid out of revenues from the Church Commissioners, the C of E's treasurer, a funded scheme was set up in 1998 to pay future benefits. It is this that faces a deficit. The problems for the scheme, which covers 9,500 working vicars and 16,000 retired officials, could be aggravated by the proposed 20% increase in their basic pay of £17,000 a year.

Vicars' pensions are paid at the rate of two thirds of the minimum stipend, so any increase will add to the burden on the fund. Retiring clergy also receive a lump sum of three times their first year's annual pension, and they are also entitled to housing assistance benefits.

The Church has asked its dioceses to comment on the proposals by the summer. It will then hand a final report to the General Synod, the C of E's ruling council, in November.

A spokesman for the Church said that although closure of the defined benefit scheme was one option, the pension fund was also looking at the possibility of converting to a new money purchase scheme or some hybrid between the two.

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