Clergy pension improvements - August 2025 update

The Synod decisions

1. What did Synod decide?
   Synod voted for a wide-ranging package of improvements to the clergy pension scheme as set out in Annex C of GS 2402. Synod also voted in favour of a Private Member’s Motion which supported and clarified the proposals in GS 2402. The Private Member’s Motion additionally called for the Archbishops’ Council to instigate a further review of what is needed to ensure that clergy and their dependents are supported in retirement with dignity and fairness – specifically in relation to both pension provision and housing. This review will be taken forward in parallel with the approved set of benefits changes.

2. Who does what?
   In a standard occupational pension scheme, the Employer sets the benefits and the pension Trustee administers them. Because clergy are Office Holders, General Synod acts as a proxy/in lieu of the Employer, with proposals brought by the Archbishops’ Council. Synod ultimately sets the Rules for the pension scheme.

   The Church of England Pensions Board is the Trustee and Administrator for the scheme. Its role includes ensuring that pensions are administered properly, conducting a three-yearly review of the pension scheme’s financial health, and setting the contributions paid by Responsible Bodies (Diocesan Boards of Finance and others) to meet the benefits agreed by Synod. The Pensions Board may also – as it has done here – prepare analysis to assist decision making for the Archbishops’ Council and Synod.

3. How did we get here?
   In February 2024, the General Synod voted for a review of stipends and pensions. This was conducted as part of, and in parallel with, the Triennium Funding process over the latter part of 2024 and into 2025. As part of the review, the Pensions Board and Archbishops’ Council listened to the Clergy Pension Action Group, which helped shape the final proposals to Synod.

   The review also took place in parallel to the 3-yearly statutory valuation of the pension scheme, so that the benefit changes could be “costed” on the most up-to-date information. The reference date for the valuation was 31 December 2024 and the draft results were completed in May 2025. The valuation will be finalised later this year, reflecting Synod’s decisions.

4. What happens next?
   Now that Synod has agreed the policy, work hands over to the Pensions Board for implementation. The first step will be to draw up the specific changes to the Scheme Rules. These will need to be agreed by Synod in February 2026 (subject to permission from the Business Committee). A small change to legislation is also required and can be made at the same time.

   The improvements will be implemented as soon as possible after the Rule changes are agreed, starting from April 2026. Changes are likely to be implemented in stages from April 2026, and it could take up to April 2027 for all changes to be applied to members’ pensions. This is a complex set of changes, requiring thousands of calculations, and it’s important to get it right. We appreciate your patience while we work through the detail.

5. How are the changes being funded?
   The improvements are being funded from within the pension scheme. The latest valuation (‘financial health check’) shows it is well-funded. Due to good investment performance, changes in financial conditions and the continued contributions from Responsible Bodies over the last decade, the scheme is more than fully funded. This means the scheme has more money than it needs to pay for benefits already earned. We are spending some of this ‘buffer’ on these improvements.

   The Dioceses and other participating bodies continue to cover the cost of future pensions through their regular contributions to the scheme.

Impact of the changes

6. Can you tell me what these changes would mean for me?
   We wrote to all members in July to explain its steps from here, with implementing the changes. If you have yet to receive your letter, please check your PensionsOnline account.

   If you have service from 2011, your pension will be increased. The exact details of what it means for each member needs to be carefully worked through. Different elements of the package will be experienced differently depending on whether you are an active, deferred or retired member. Below is a guide as to what expect, but we are not yet able to provide individual calculations. Many thousands of members will see their pensions improved under these proposals and it will take time to work through changes.

7. When will I start to see improvements to my pension?
   We will implement the changes as soon as possible. The first step is for Synod to set the new Rules in February. We cannot do anything before this.

   From there, improvements will be implemented in stages from April 2026 onwards. We are still working through the plans for this. It could take until April 2027 (or later) to get all changes in place. Where needed, we will backdate changes to April 2026 so that different groups of members are treated fairly.

8. Will these changes apply to widow's or widower’s pensions?
   Yes. The changes will apply to these pensions, where their spouse or civil partner had service from 2011.

9. Are there any tax or other implications for me from this change?
   This depends on your situation.

   For Active and Deferred members: We need to value your pension each year in line with HMRC guidance. There is a maximum amount that your pension can increase by in any tax year before you need to pay tax. This is called your Annual Allowance, and the limit is currently £60,000. While this sounds like a lot, these changes might mean some individuals will go over this amount and incur a personal tax charge. This is more likely if you are saving AVCs or recently moved into a ‘higher’ role. If this applies to you, we will write to you after the tax year has ended to explain your options. You can use previous unused allowances to cover a tax charge, so in many cases no tax charge will be due.

   For retirees: You might pay more tax on your monthly pension payment. Also, if you are receiving means-tested State benefits, higher pension income might affect the amount you receive or change your ability to claim. There may also be an Annual Allowance issue for pensioners depending on how the retrospective changes are implemented. If you are affected by this, we will let you know.

10. Will there be an extra increase on Pensions Board rents linked to the pension improvements?
    No.

Upcoming retirements

11. Can I use the retirement estimate tool online to see what the changes will mean for me?
    No, not yet. It will take time to get these tools updated, and we can only do this once Synod has agreed new scheme Rules in February.
12. I am due to retire this year. Should I put that off? Will I get more money if I do?
    The Pensions Board cannot offer you financial advice, or tell you what is the right retirement date for you. We understand there are lots of reasons why members select their chosen retirement date. If you retire before we start making improvements, your monthly pension will increase to reflect the changes.
13. Will I get a higher lump sum if I wait until the changes are put into place?
    Based on the current proposals, yes, lump sums will be higher for future retirees. If you are looking to maximise your tax-free lump sum, you may find it more advantageous to take your pension after April 2026. If you are unsure about this, you might want to take independent financial advice. You can find out how to find a financial adviser here.
14. I was thinking of transferring my benefits out of the scheme. Can I still do this?
    If you transfer your benefits out of the scheme before the 1 April 2026, the transfer value (CETV) will be based on your current benefits without these improvements. You should consider taking independent financial advice to assess whether to still proceed as planned or to do so later.

The Further Review

15. What are the terms of reference likely to be for the further review commissioned by Synod?
    These are still to be confirmed. The Synod motion requested “a comprehensive, independent review of what is needed to ensure that clergy and their dependents are supported in retirement with dignity and fairness – specifically in relation to both pension provision and housing. The review should be chaired by an independent lay person with a working group representing all relevant interests, and engaging fully with clergy, clergy spouses, retired clergy and other stakeholders (including the Clergy Pension Action Group and the Retired Clergy Association). The review should initially report back to Synod within 12 months.”

    From the discussions at Synod, members asked that the review might consider matters such as:

    • If a level of pension should be accrued during ordination training
    • More support for part-time clergy and those who take breaks for ministry for family or other reasons.
    • Strengthening the link between the ‘in-ministry’ package (of stipend plus tied accommodation) and retirement provision

    More details will be shared as soon as they are known.