Comments and Explanations
1. The Legislative Committee of the General
Synod ("the Synod"), having had referred to it a Measure
entitled the Church of England (Pensions) Measure ("the Measure"),
has the honour to submit that Measure to the Ecclesiastical Committee.
The history of the Measure is as follows:
July 2001the draft Measure
was given First Consideration by the Synod having been introduced
on the instructions of the Business Committee.
There were no submissions for amendments
made to the Revision Committee from Synod members. The Revision
Committee dealt with its business by correspondence and made no
amendments to the draft Measure.
November 2001the draft Measure
passed through Revision Stage in the Synod with no amendments
Later at the same Group of Sessions
two minor drafting amendments were made at Final Drafting stage
after which Final Approval of the Measure was taken. Only one
speech was made in the Final Approval debate, asking whether any
Order to further extend the Commissioners' power to spend capital
(clause 5) could be approved by the Synod under the "deemed"
procedure (ie without any debate or vote). It was explained in
reply that the draft Measure had deliberately been drafted in
such as way as to exclude the possibility of using the deemed
procedure in relation to the approval of any future Order. Any
such Order would therefore have to be debated by the Synod.
The Synod proceeded to Final Approval
and the Measure was Finally Approved on a division by Houses.
The voting figures were as follows:
PART I: A SUMMARY
2. This Measure contains a number of provisions relating
to the powers of both the Church of England Pensions Board ("the
Pensions Board") and the Church Commissioners ("the
Commissioners"). Clauses 1 to 4 deal with a number of relatively
technical matters while clause 5 deals with the Commissioners'
power to spend capital.
Clauses 1 to 4
Pensions Board Discretionary Funds
3. The Pensions Board has under its management various
discretionary funds. These funds have emerged as a consequence
of the generosity of benefactors and parishes over the years in
order to enable the Pensions Board to make supplementary provision
in specified ways for clergy pensioners in need. Hence the Pensions
Board is able through the management and administration of these
funds to make supplementary payments to pensioners, including
widows, who have low total incomes, and to provide for assistance
with retirement housing. These are aspects of the work of the
Pensions Board which make a significant contribution to the welfare
of clergy pensioners.
4. The Measure deals with several funds of this kind.
The Pensions Measure 1961 continued or established three augmentation
funds, each with particular categories of beneficiary. In 1975
the Pensions Board established, by resolution not Measure, a further
fund, the General Purposes Fund. The effect of this Measure is
to amalgamate these three funds with the General Purposes Fund.
The advantage of this is to give greater flexibility to the Pensions
Board in exercising its discretionary powers and hence to enable
the most effective use of the funds under its administration.
5. The Measure also widens the Pensions Board's powers
in relation to the provision of retirement housing. At present
the Pensions Board is unable to offer any discretionary assistance
to the spouse of a pensioner when a couple in receipt of retirement
housing assistance from the Pensions Board divorce after retirement.
6. The Measure also address another technical matter,
clarifying that the cost of pension contributions arising from
the dispossession of clerks in Holy Orders under the Incumbents
(Vacation of Benefices) Measure 1977 or the Pastoral Measure 1983
should fall upon the Diocesan Board of Finance.
Commissioners' Power to spend Capital
7. This Measure also deals with the important matter
of the power of the Commissioners to expend capital in support
of their pension liabilities. Its provisions renew the mechanisms
which were agreed by Synod in 1996 (after wide consultation throughout
the Church) when it gave Final Approval to what Parliament subsequently
approved as the Pensions Measure 1997.
8. The Commissioners have a range of responsibilities
upon which they expend their funds. These include parish ministry
support, bishops' working costs, and grants to cathedrals and
money given to other bodies in support of their administrative
expenditure. In most cases the amounts they spend are discretionary.
These non-pension responsibilities stand alongside their statutory
responsibilities for pensions arising from service before 1998.
The key issue facing the Commissioners is the management of their
assets and income in the most effective and strategic way so that
they can make the best possible investment returns and at the
same time carry out all their spending in a planned and coherent
9. The Commissioners plan for around half of their capital
assets to be expended over the next 60 years or so in settlement
of their pension liabilities, at the end of which period all such
liabilities would be extinguished. The Commissioners are already
expending capital in meeting these liabilities, indeed in the
year ended 31 December 2000 the Commissioners spent £34.7
million from their capital assets to help to meet the cost of
their pension liabilities. The Commissioners spend this capital
under an existing power (conferred by the Pensions Measure 1997)
that runs out on 31 December 2004. This Measure would renew that
power for a further seven years, until 31 December 2011.
10. If the Commissioners did not have this power, they
would have to make substantial cuts in their discretionary expenditure
and/or realign their investment portfolio in order to hold a significantly
higher proportion of relatively high income-yielding bonds. They
would then lose the potential for higher investment returns of
shares and real assets. This would probably reduce the amount
of money they could spend overall in both the short and the long
term, for example in areas of need and opportunity.
11. In summary, nearly half the Commissioners' funds
are needed to meet their pension liabilities. Those pensions will
run out in sixty years or so and by then half of the fund will
have gone. This Measure renews the legal power for that to happen
in a way that will allow the Synod and Parliament to have a continuing
interest in its operation.
12. This Measure contains no proposals for the renewal
of the existing power for Commissioners' funds to be spent on
transitional relief to the dioceses to enable them to meet their
pension liabilities for service from 1998 onwards. This power
will end on 31 December 2004. The principle agreed between the
Synod and Parliament in the passing of the Pensions Measure 1997
was that the cost of pensionable service from 1998 onwards, which
was to be raised from dioceses, should be transparent. Hence the
welcome and helpful arrangements for transitional relief in order
to manage this transfer of costs were only ever intended to be
13. Finally, this Measure allows for subsequent renewals
of the power to spend capital in discharge of the Commissioners'
pre-1998 pension liabilities to be made by Order, rather than
by Measure, thus streamlining the renewal process. Such an Order
would not come into force, however, unless it had been approved
by Synod and laid before Parliament under the negative resolution
procedure, so that Parliament and Synod will continue to be able
to keep these arrangements under regular review.
14. In summary, therefore, this Measure is one that both
rationalises the administration of discretionary funds in the
hands of the Pensions Board and also, by extending their power
to spend capital, allows the Commissioners to manage the resources
under their own control in the most strategic and effective manner.
15. The Legislative Committee hopes that the Ecclesiastical
Committee will be able to issue a favourable report on the Measure,
but in the event of the Ecclesiastical Committee requiring any
further information or explanation, the Legislative Committee
stands ready to provide it.
On behalf of the Committee
4 January 2002
PART II: NOTES
Clauses 1 and 2
16. Three discretionary funds in the trusteeship of the
Pensions Board are continued or established by sections 19, 20
and 28 of the Clergy Pensions Measure 1961 ("the 1961 Measure").
These empower the Pensions Board to use those funds for assistance
with housing or "relief of poverty" for specific categories
17. By the mid 1970s, it had become apparent that the
Pensions Board would be better placed to give discretionary help
to those retired from stipendiary ministry, or widows and other
dependants of those who had served in the ministry, if there were
a single fund covering all the classes of beneficiary. Such a
Fundthe General Purposes Fundwas thus established
by a Resolution of the Pensions Board.
18. In order to maximise its flexibility in giving discretionary
support, the Pensions Board's fund-raising has focused on the
General Purposes Fund. Having regard to subsequent changes in
ministry, the Pensions Board now feels that flexibility would
be enhanced if the four discretionary funds were amalgamated into
a single General Purposes Fund. There would also be consequential
savings in administrative costs. As the amalgamation can be achieved
by Church legislation, no Charity Commission Scheme is needed
to give effect to the proposal. The Commission has, however, been
consulted informally and raised no objection to what is proposed.
19. Clause 1 of the Measure gives statutory recognition
to the General Purposes Fund. It goes on to provide for it to
be able both to receive gifts made for purposes corresponding
to those of the three funds described in sections 19, 20 and 28
of the 1961 Measure and to apply funds for those purposes.
20. Clause 2 provides for the three funds to be wound
up and their assets to be transferred to the General Purposes
Fund. It also allows for a continuation of existing arrangements
enabling dioceses to channel discretionary assistance to individuals
through the Pensions Board and the centrally administered pensions
21. The Pensions Board has a power to assist with the
provision of retirement accommodation for those who have served
in the stipendiary ministry. This is contained in section 26 of
the 1961 Measure, as amended by subsequent legislation.
22. The limitation of the scope of that power can give
rise to a difficulty in a case where a couple who are being assisted
with housing by the Pensions Board divorce in retirement. Whilst
the Pensions Board is able to continue to assist the person who
is receiving a Church pension, it is not able to assist the ex-spouse
if the marriage is legally terminated.
23. The Pensions Board wishes to be in a position to
be even-handed in the on-going provision of housing if the marriage
of a couple receiving such assistance breaks down. The purpose
of this Clause is to place it in that position.
24. The Incumbents (Vacation of Benefices) Measures 1977
and 1993 provide that, at retirement, a pension should be augmented
so that a period of receipt of compensation should be treated
as if it had been pensionable service. The Diocesan Board of Finance
is responsible for the cost.
25. The Pastoral Measure 1983 similarly contains provisions
for compensating an incumbent dispossessed of his or her benefice
by virtue of a pastoral scheme. These include treating the period
between dissolution and pension age as if it were pensionable
service. The cost of the pension rights is to be paid by the body
responsible for the compensation, namely the Diocesan Board of
26. The new Measure clarifies the position in both respects
in relation to the Funded Pensions Scheme, the establishment of
which post-dates the Measures mentioned above, by adding to the
list of bodies responsible for pension contributions set out in
the Pensions Measure 1997 ("the 1997 Measure").
27. The 1997 Measure:
(a) limited the Commissioners' pension liabilities to
those arising from service before the end of 1997;
(b) created a funded scheme into which dioceses (through
funds raised from parishes) pay clergy pension contributions in
respect of service from and after 1 January 1998; and
(c) gave the Commissioners power until 2004 to give financial
assistance to Diocesan Boards of Finance and others in taking
on the cost of clergy pensions.
28. The 1997 Measure also gave the Commissioners power
until the end of 2004 to spend capital in meeting their pensions
liabilities. In doing so, it allowed the Commissioners to preserve
a significant amount of support for the Church's active ministry,
including that in the neediest parishes.
29. Clause 5 of the Measure substitutes a new section
7 in the 1997 Measure to give effect to the Commissioners' proposals.
30. New section 7(1) is needed to preserve the ability
of the Commissioners under the present section 7(1) of the 1997
Measure to spend capital until 31 December 2004 to meet the cost
of grants under section 6 (which enables the Commissioners to
make transitional grants to a responsible body, in order to assist
that body's contributions to the new funded pension scheme). That
power would otherwise fall away, were the new provisions set out
in the remainder of Clause 5 to come into force before the end
31. New section 7(2) extends for a period of seven years
from 1 January 2005 the power to use the Commissioners' capital
for the two purposes currently permitted until the end of 2004
by section 7(1)(a) and (b) of the 1997 Measure. (These purposes
("the specified purposes") are, respectively, the payment
of clergy and staff pensions in respect of service before 1998.)
32. New section 7(3) enables the Commissioners to make
an order before the end of 2011 extending their power to spend
capital for the specified purposes for a further period of up
to seven years.
33. New section 7(4) enables the Commissioners to make
further orders in the future to extend the power to spend capital
for the specified purposes for up to seven years at a time.
34. New section 7(5) requires the Synod to approve each
such order of the Commissioners. The "deeming" procedure
would not be available.
35. New section 7(6) means that, after approval by the
Synod, each such order of the Commissioners lies before both Houses
of Parliament for forty days, and is during that time subject
to annulment pursuant to a resolution by either House.
36. New section 7(7) reproduces section 7(2) of the 1997
Measure. That re-enactment is needed, for technical reasons, in
the event of the substitution for section 7 of the new provisions
set out in Clause 5.
37. Clause 6 of the draft Measure effects a number of
repeals consequent upon the amendments to be made by clauses 1
38. Clause 7 deals with the short title, commencement
and extent of the Measure.