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 184.

    "I can generate more income than an annuity"
    With the greatest of respect, it'd be pretty appalling if you couldn't, wouldn't it?

    Politicians are just waking up to the fact, that the people have rumbled that one. The fact that even the Tories have increased the capped drawdown limit to 120% of the GAD annuity rate shows that.

  • rate this

    Comment number 183.

    @100Anthony Rat "I stopped paying into any personal pensions 10 years ago

    I never started 40 years ago
    This whole pay now and get a bucket of promises at 60 or 65or70??
    is a con waiting to happen

    With tax free investments, personal allowances and capital gains allowances I can generate more income than an annuity and still have earnings growth and capital growth with a limited tax bill

  • rate this

    Comment number 182.

    "Gordon Brown institutionalised the state theft of private sector pension funds"
    Tax on dividends held by funds in both sectors is all it did, as in many countries. It's made little difference to mine: a small increase in contributions covered it.

    If it's as awful as you claim, why haven't the Tories reversed it?

    Management fees are what you mean, and 0% interest.

  • rate this

    Comment number 181.

    The second coming has been postponed after a fact finding mission found out there was nothing worth saving.

  • rate this

    Comment number 180.

    100.Anthony Rat "I stopped paying into any personal pensions 10 years ago, when even though I was paying in, the pension amount actually went down"

    Very wise. Gordon Brown institutionalised the state theft of private sector pension funds in Labour's 1997 Finance Act, and it continues to this day.

  • rate this

    Comment number 179.

    As we have an established church, there's a whole branch of property law connected with it, covering everything from tithes, to covenants on other property for the repair of church roofs (fortunately largely reformed). Some of the beneficial incomes and the power to assign them, (such as "Livings") still come under this though.

  • rate this

    Comment number 178.

    129. U14627529

    Recently, I was appalled when my daughter told me that a priest had assured her at school that there was more historical evidence for Jesus Christ than for Julius Caesar!
    The priest was probably right in terms of historical documents. Christ did walk the earth, as did Julius, curiously enough both were considered divine,.

  • rate this

    Comment number 177.

    Dr_Ads - check on the HMRC site the tax differences that step from "representative" occupation as opposed to "beneficial" occupation. Nothing to do with Charitable status but everything to with the capacity in which the property is occupied.

  • rate this

    Comment number 176.

    @166 and 171

    And the "word" became 400 characters, and 400 became 800,
    And 800 will become a gospel, and truly the money lenders will be driven out and we shall all reach the promised land.

    I SAY

  • rate this

    Comment number 175.

    OK, the discount rate used has been increased by 0.5%.
    But what has it been increased to?
    4% 5%, 6%?
    And is the new higher rate actuarilly justifiable?
    Come on, Robert!

  • rate this

    Comment number 174.

    45. angry_of_garston
    The church has a pension scheme?

    Whatever happened to Philippians 4:19?

    "And my God will supply every need of yours according to his riches in glory in Christ Jesus."
    I prefer Matthew 25:14-30
    English Standard Version

  • rate this

    Comment number 173.

    Wouldn't the provision of accommodation for the vicar & his family be subject to taxation as a 'benefit in kind' if the church wasn't registered as a charity?

  • rate this

    Comment number 172.

    Jesus gave up all his worldly goods. So it's amazing that the church have such a hierarchical structure with different pay scales. The nearer god you want to portray yourself the less income you should ask for. What I'm saying is the higher paid need to get nearer the lower paid in terms of salaries in the church and their pensions.

  • rate this

    Comment number 171.

    the_hot_chef @166
    "In the beginning"

    "And again": the money-takers & lenders-on did speak untruths, unwitting or not to fund the transfer of our ownership - and our jobs to follow - from a locally-based jet-set to a remotely or non-based jet-set, playing one work-force against another

    Lo, so blinkered, the people do not even see to 'forget' what underlies their tragedy: the trap of inequality

  • rate this

    Comment number 170.

    the comment about endowments is not entirely true as some of us did well out of them !
    The "endowments were rubbish" myth is a fallacy that seems to get repeated without thought .

  • rate this

    Comment number 169.


    The value of gilts rises when yields fall. Most schemes would be worse off had they not held gilts.

    The issue is that gilt yields are used to set the discount rate, which then increases the value of the liabilities (and any deficit) when yields fall. The problem is most schemes are not sufficiently protected against this risk.

  • rate this

    Comment number 168.

    141. FauxGeordie

    Obviously it was known about, that was my point, if you look at the two examples I gave. The Spanish Inquisition always announced their imminent arrival, and Savile was known about for decades before being denounced in the press.

  • rate this

    Comment number 167.

    Pension? What Pension? I am past the pension age and still working because I have no choice. The companies that I had worked for whilst out of the UK invested in the 'privet' pension schemes and I had therefore stopped paying in to the UK pension fund. Then I find out that some fat cat has 'lost' my money in bad deals and the UK pension is not worth picking up at the moment. So I WORK and not sob!

  • rate this

    Comment number 166.

    In the beginning was the word and the word was with prophets and was "endowments"This would bring untold riches to the believers if they made sacrifices monthly But the money lenders spoke untruths and the riches never came and the people saw that it was bad
    So the money lenders said "annuity" and "pensions"Lo the people had forgotten and made sacrifices and again the money lenders spoke untrurhs

  • rate this

    Comment number 165.


    "that's based on agreed life expectancies of 90 and 88"

    Who signed up for that?!? Is there a penalty for non-compliance?


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