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.

Cash-strapped

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
    +23

    Comment number 2.

    Parable of the Black Holes

    And lo after the excesses of QE high inflation and lack of investment, many black hole were created in Government, private and company pensions
    And the people saw the MPs fat pensions and asked
    Have we not worked 40 years? Have we not contributed?
    Should our pensions not also be full?
    But the MPs said "It´s not their fault"
    But still the old people went cold + hungry

  • rate this
    +23

    Comment number 3.

    Pensions in Britain are the worst anywhere in Europe...Why?
    Because both political parties have allowed so called pension funds to be run as beneficial to the company's running them rather than the people investing in them. The hidden charges and annuity system is just a rip off and illustrates why so many people do not have any faith that what they save will be there for them when they retire.

  • rate this
    +15

    Comment number 1.

    The Anglican Church is a business with a product that no one wants, and simply is going the way of other "death-spiral" businesses. It seems simply the spiritual incarnation of Woolworths.

  • rate this
    +13

    Comment number 14.

    The Good Lord will provide :O)

    Seriously, I used to work in the same building in London as the Church of England estate managers. Three floors of administrators and clerks. That's a big footprint seeing as the international shipping company I worked for only had one floor.

    Presume its the same for all major religions so I doubt any clergy will be going hungry tonight. Their flock, however...

  • rate this
    +12

    Comment number 20.

    To the fools who think the Church is separate from Mammon...

    Church pension problems are the direct result of the idiots at the Bank of England - if you don't understand this they you have been asleep since 2008.

    The bankers have stolen clergy pension funds. (just like they stole yours and mine)

    The Bank of England set up a criminal theft system and have been running this for the 5 years.

 

Comments 5 of 184

 

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