However, the CofE didn't take this story lying down, however, and have hit back with the accusation that the story in the FT failed to take into account the youth of the fund. Since the fund is new, and therefore will not be paying out significantly for some time, equities represent a better bet, as they tend to outperform other investments in the long term, despite volatility in the short term. Nor did the Church deny that the central point of the FT article that they were considering making changes to the pension fund rules in light of its recent appalling performance.
Mouse is not entirely taken in by the Church's line on this, however. The fact that they have already diversified the fund by shifting to 20% bonds is an indication that they are not entirely happy with their previous strategy. More importantly, however, the FT article explicitly mentions the youth of the fund and the amounts it is paying out. There is no indication at all that they failed to take this into account.
Mouse is not a pensions expert, so will not make his own judgement. However, he is rather more convinced by the independent experts, than those attempting to defend the loss of huge amounts of other people's money.
Mouse is not entirely taken in by the Church's line on this, however. The fact that they have already diversified the fund by shifting to 20% bonds is an indication that they are not entirely happy with their previous strategy. More importantly, however, the FT article explicitly mentions the youth of the fund and the amounts it is paying out. There is no indication at all that they failed to take this into account.
Mouse is not a pensions expert, so will not make his own judgement. However, he is rather more convinced by the independent experts, than those attempting to defend the loss of huge amounts of other people's money.
I declare an interest as a Trustee of the Clergy pension fund. The first point to make is that clergy pensions come from two different funds. The majority of pensions currently paid out are for service up to 1998, and are paid for by the Church Commissioners. Only 54% of the CC funds are in equities, with over a third in different types of property, with the rest in cash and other non-equity. These funds have outperformed comparable secular funds over the last decade. Their latest annual report is available at http://www.cofe.anglican.org/about/churchcommissioners/annualreport2008/
ReplyDeleteBack in the 1990s the Church designed an expensive new scheme, but for the last decade has never paid enough in the way of contributions from parishes and dioceses to make it viable. The actuarial deficits have mounted steadily, even although the contribution rate has been gradually raised ... too little, too late.
Almost every other defined benefit (final salary) based pension scheme has suffered badly in the current financial crisis, exacerbated by pensionsers living longer than expected and much tighter government regulations and valuations. Most other large companies have closed their schemes.
So earlier this year the Archbishops commissioned a review of the new young scheme, with recommendations published earlier this summer, diocesan consultations this autumn, and General Synod expected to make decisions next February. It is expected that pension benefits will be reduced in the longer-term, mainly affecting younger clergy. Retirement ages will need to be raised to get full pension entitlement. Synod will be asked to decide how much of the investment risk should be borne by the parishes, and how much by the clergy themselves (as happens in most secular schemes). The background papers have been available for months at http://www.cofe.anglican.org/info/pensions/
I'm currently one of the candidates for the vacant positions on the Pension Board. If I get elected I want to get to grips with the investment strategy and perhaps set the record straight on whether the Board invests too riskily or not.
ReplyDeleteThe points that interest me in teh reporting of this story are:
ReplyDeletea) That the FT mentioned the £10m or so going out of the fund each year, but was silent on the much greater figures of £70m going in. For an FT analytical story, it should have been better.
b) The way the story ran around the Press and Media, without any comment apparently being obtained from the Church (I first heard the story on the Today Programme before 8am).
c) That someone in the Church Pension Fund seemed to have their media relations act together (good).
d) Why anybody covered the story at all, bearing in mind that it is all based on old material which was published nearly 6 months ago? Why now?
The only hooks I can find are that the Consulation period on the changes has just finished, or that Mr Ralfe did a superb media relations job himself.
e) That the whole thing emanated from a single source, Mr Ralfe, and the press/media seem to be insufficiently sceptical in reporting his line. I'll acknowledge, after hearing him on R4 on Saturday lunchtime, that he is both professional and credible, but that doesn't justify the lack of media probing.
f) That the whole thing fits the standard "Church broke" and "Church bad at financial management" templates.
g) That Ruth Gledhill did a damned good detailed job in the Times. That may be because the Times was late on this one, and didn't have so much deadline pressure.
h) That the FT illustrated an upcoming media problem when they linked from their public blogs to source articles behind their paywall.