Ecclesiastical Committee Two-Hundred and Seventeenth Report

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 2001—the 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 2001—the draft Measure passed through Revision Stage in the Synod with no amendments made.

    —  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:
Bishops 281


  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.

Retirement Housing

  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.

Pension contributions

  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.

Clause 5

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 fashion.

  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 temporary.

  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

Brian McHenry

Deputy Chairman

4 January 2002


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 of beneficiary.

  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 Fund—the General Purposes Fund—was 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 payroll.

Clause 3

  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.

Clause 4

  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 Finance.

  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").

Clause 5

  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 of 2004.

  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 to 4.

  38.  Clause 7 deals with the short title, commencement and extent of the Measure.

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2002
Prepared 20 November 2002