The
Church of England has warned members of its pension scheme that it may have to
sacrifice its final salary pension scheme. Get more information about it here.
By Charlotte
Beugge
Members of
the Church of England pension scheme have been warned that they may lose their
right to a retirement income based on final salary, it has emerged.
According
to a report in the Financial Times, the final salary scheme could be replaced.
It says that a document submitted to the church's general synod last week said
it was considering moving to a hybrid scheme where both the employer and
employee share the risk.
With final
salary or other defined benefit pensions, the risk is entirely on the employer
to provide the promised retirement income. With defined contribution or money
purchase schemes, the employee is at risk of their own fund not growing by
enough to produce a reasonable retirement income.
Few
private sector employees have final salary pensions and many public sector
workers are seeing their benefits in these schemes cut back.
The
document the paper refers to states the church is contributing payments equal
to 38.2% of each cleric's pay to cover new benefits and a shortfall in the
scheme.
It adds
that the church understands that to change clergy's pensions would hit many
hard as most do not own their own homes and are "more dependent on a
predictable income after retirement".
There have
already been changes to the scheme, with the retirement age raised from 65 to
68 and the number of years needed to qualify for a full pension increased from
40 to 41.5. The paper quotes the Church of England as saying that when the
Pensions Board met in the autumn, it said "no immediate emergency action was
needed".
