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Clergy Pension Scheme

Changes in the clergy pension scheme

  1. Clergy have been receiving letters from the Church of England Pension Board, part of which has explained that the retirement age will increase from 1 January 2011 from 65 to 68. It appears that the helpline responses have been unhelpful so this information is intended to try and clarify exactly what the position is.
  2. The change does not mean that clergy cannot retire until the age of 68. What it does mean is that the pension age moves from 65 to 68 for benefits built up from 1 January 2011 onwards. Benefits earned for service before 2011 will continue to be based on a pension age of 65.
  3. So the change does not mean that you have to work to age 68. You will still be able to retire at any time from age 55 if you want to. If you retire at 65, all the benefits you have earned up to now will be due without any reduction at all. Only those pension benefits you earn from 1 January 2011 would be reduced for early payment. This means that the closer you are to retirement, the less of an effect this change will have on your pension.
  4. This is the headline information and below is some more detailed information you might find helpful.
  • The current rates of reduction from 2011 are 4.5% off your pension and 3% off the lump sum for each year you retire earlier than the retirement age that formed the basis of the benefits when you earned them.
  • Benefits for service from 1 January 2011 will be based on a full clergy pension being earned over 41 1/2 years rather than 40 years as it is at the moment. This would mean that, instead of each year counting as 1/40th of the full benefit, it would count as 1/41 1/2.This change would only apply to years of service you complete after 1 January 2011. So, as with the change to pension age described above, the nearer you are to retirement, the less the change will affect your overall benefits.
  • The other complication is that from 1 January 2011 as the Bishop explained in his last Ad Clerum the Pension Scheme is contracting back into the State Second Pension scheme, which will have the effect of a smaller clergy pension but a larger state one. You will have to pay higher contributions, but the Diocese is increasing your stipend to cover this.
  • It is rather complicated to assess how much (or little) pension you would get depending on when you wish to retire. The Pensions Board do hope to be able to offer a ready reckoner to enable someone to calculate this themselves, but they do not promise that it will be available very soon. But I hope this reassures you that if you intended to retire shortly at age 65 this will not affect you greatly.

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Clergy Information
This information has been produced with the intention of providing advice and help on a range of practical issues regarding your ministry and informing you about the support and services available within the Diocese.