An unholy pension hole

The Archbishop of Canterbury Justin Welby

The Archbishop of Canterbury, who has taken upon himself the role of scourge of big opaque banks and profiteering payday loan companies, is today accused of ignoring a financial sleight of hand on his own doorstep.

John Ralfe, who would be seen by many as the bane of allegedly reckless pension funds, has written to Archbishop Welby to warn him that the deficit of the Clergy Pension Scheme may have been seriously understated.

Ralfe also complains that he was refused access to the data, and had to obtain it through a backdoor route, which he says is "not a good example of the Church's transparency and openness".

Black hole

The Clergy Pension Scheme has 16,400 members, including 5,800 pensioners, and its latest valuation showed a £293m deficit, which seems big, but was only modestly higher than the £263m deficit of 2009.

Ralfe points out that the increase in the scheme's hole would have been much higher - to a substantial £391m - if it had not been for a jump in the discount rate used for calculating the scheme's liabilities.

The important point is that the higher the discount rate, the smaller the liabilities. And the Clergy Pension Scheme increased this rate by 0.5% without - according to Ralfe - giving an explanation for why this was appropriate.


Ralfe calculates that if the deficit had been recognised at that higher £391m, cash-strapped dioceses and parishes would be forced to shell out £90m a year to provide vicars and other church officers with pensions, compared with the 2012 outlay of £69.4m.

He complains that at the synod in November, there was no discussion of the pension hole, because the official view was that the deficit had hardly increased and contributions would therefore rise by less than £3m.

Ralfe says: "If this £21m a year increase had been tabled at the Synod, it seems likely dioceses would have pushed to close the scheme... The Archbishops' advisory group reported in 2010 that only 18 of the 42 dioceses supported sticking with DB [final salary] pensions".

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 44.

    I would suggest its a massive cock-up, not conspiracy with actuaries giving poor advice, trustees taking it, against back-drop of political meddling, various problems elsewhere (wrong decisions over Base rate, inflation, tax rates, types & payers, etc.) & an amazing lack of concentration of minds, well, two in particular.

    Dave&GO need to get their heads around this with some urgency

  • rate this

    Comment number 43.

    The Archbishop should have listened to the teachings of the bible “Let He Who Is without Debt Cast the First Stone" when he started a war against Wonga. I hate to say it but at least they are open about their rates and their business objectives. It’s a pity that the Church can’t say the same.

  • rate this

    Comment number 42.

    I trust that the Church will not expect the tax payers of the country to bail them out.

  • rate this

    Comment number 41.

    God will provide

  • rate this

    Comment number 40.

    Every time I read about pension black holes I think two things: 1. Gorgon Brown's first of many victories in his war against wealth and prosperity; 2. Boy am I glad I invested in non-regulated retirement ideas!

  • rate this

    Comment number 39.


    I don't see the connection - you'll need to expand please. Are you saying that you think this is a problem caused by 'big finance'?

    It not straightforward, but I generally agree.

  • rate this

    Comment number 38.

    "age expectancy is not increasing at an unexpected rate & actuaries were paid lots of money to help pension funds make adequate provision for it."

    There is only so much anyone can do when the worker/pensioner ratio is wrong.
    Comrade, with an official popn of 62m (unofficial closer to 70m) I would suggest worker:retiree ratio is NOT the problem.

  • rate this

    Comment number 37.

    Archbishop whatsisname is an ex-banker so ought to understand this sort of thing. But then he was going to outcompete Wonga into bankruptcy as I recall and that hasn't happened yet either.

  • rate this

    Comment number 36.

    The Church being secretive?

    I find that hard to believe!

  • rate this

    Comment number 35.

    All pension schemes will have stories like this coming up, they only look like they are going up as long as the market keeps being propped up and pretty sure the impact of all those juicy management fees will start really hitting soon.

    Biggest Ponzi scheme in history, in 20 years we'll wonder what on earth we were thinking trusting our twilight years to a bunch of conmen and gamblers.

  • rate this

    Comment number 34.

    In July 1997 Brown changed the status of private pension funds, an act, he perceived as class legislation.

    Over a 10 year period this had the effect of removing about £80Billion plus from the private pension funds.

    This act of financial vandalism by Brown was against the wishes of the Labour NE, pension experts and Unions.

    Look no further for the origin of the UK pensions disater

  • rate this

    Comment number 33.

    Random Advice @27
    "The Lord gives,
    and… takes away"

    Aside from arguments over any 'original' possession, and its alienability in moral terms (not least with respect to destruction of 'the community' and of hopes for our the future generations) and in law (whose law, how decided… or paid for), have we not long grown rightly suspicious of 'The Lord' coming in pomp and armour, sword in hand?

  • rate this

    Comment number 32.


    "age expectancy is not increasing at an unexpected rate & actuaries were paid lots of money to help pension funds make adequate provision for it."

    There is only so much anyone can do when the worker/pensioner ratio is wrong. You can squeeze for a better return but not for long.

    Get the ratio right. Be prepared to raise (or lower) the retirement age. Politicians won't though.

  • rate this

    Comment number 31.

    And the money lenders said,
    "give me your money each month, and lo yee will all see the promised land"
    But the land was not theirs to promise.
    And many peolple were left in the wilderness and were angry.

    And the moral of todays HYS is
    Thow shall not believe false promise of milk and honey tomorrow !
    For the money lenders are false Gods !

  • rate this

    Comment number 30.

    could not believe this headline

    actuaries actually have a 'magic pencil'?

  • rate this

    Comment number 29.

    People living to a ripe old age is something of an inconvenience to business and government these days. It eats into income revenues. Most vexing when you have to spend money on old people when they stop producing
    Except age expectancy is not increasing at an unexpected rate & actuaries were paid lots of money to help pension funds make adequate provision for it.

  • rate this

    Comment number 28.

    Take care, and be on your guard against all covetousness, for one's life does not consist in the abundance of his possessions.

    The Lord gives, and the Lord takes away.

  • rate this

    Comment number 27.

    "the people have been robbed"
    NOT in "2008": long ago

    To show the way to 'robbers', we have to share with them knowledge that all of us are 'robbers', born to 'take for granted', most to appease, some to collude - as hangers-on or in-full-glory Quislings - deriding equal partnership, selling the rule of inequality: fear & greed, conflict of interest, inevitable & cumulative corruption

  • rate this

    Comment number 26.

    It could be that those operating the pension scheme see interest rates rising and therefore greater returns for funds under management.

  • rate this

    Comment number 25.

    Batman: "Robin, you've opted out of your opt-in pension."
    Robin: "Gee, I'm only eighteen, I need the money for bat-petrol"
    Batman: "It won't be long until you are old enough to need a pension, Robin, better to save now."
    Commissioner Gordon: "The Joker has appropriated the interest rates necessary for pensions to accumulate."
    Robin: "Holy pension hole, Gotham City is suffering.."


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