In the eyes of their members, defined-benefit pension schemes are usually divine. But for the clergy of the Church of Ireland, faith in their retirement fund to provide is being tested by a €45 million deficit.

A report to members of the Church of Ireland General Synod, to be held in Armagh in May, recommends that the synod votes to close the clergy pensions fund and replace it with a defined-contribution scheme.

Estimate
Actuaries have estimated that the assets of the fund are sufficient to cover only three-quarters of the liabilities, after the interest rates paid on the bond investments by the fund were less than glorious.

The report gives its blessing to the establishment of a defined-contribution scheme, which would mean each clergy member would see their retirement plan exposed to the whims of the omnipotent stock market. It implies this would not be as financially perilous as “the risks inherent in a defined-benefit fund, where such a fund could become actually insolvent, or technically insolvent”.

Contribution to the new scheme will be by both the clergy member and the parish or diocese.

“It is not possible to guarantee the level of pension which can be secured from the funds that will be accumulated in each individual’s defined-contribution account,” the Representative Church Body’s report warns, though it adds that the level of contributions suggested “could be expected to generate an equitable pension in retirement”.

The body has proposed “a series of initiatives” to secure and protect the benefits accrued by members of the clergy pensions fund to date.

The church’s scheme is not alone in its travails. Eight out of 10 defined-benefit pension schemes are now insolvent.