Pensions Policy

Date: 29th August 2016

Author: Paul Roberts

Subject: Proposal for revision to pension policy for Christ Church

Status: Approved by F&S on 8th September 2016, but subject to a recommendation for the E&RS to reconsider the employee contribution requirements for administrative staff.

 

Summary

  • All pastoral staff receive employer pension contributions calculated as 20% of their stipend (ie pay excluding any accommodation allowance), no requirement for personal contribution.
  • All administrative staff receive employer pension contributions calculated as 10% basic salary and are required to make contributions of at least 3% of their basic salary to receive the employer contribution.
  • E&RS will nominate a preferred pension provider, and new staff will be directed towards this provider.  However, at the discretion of the E&RS employer contributions may be made to an alternative personal pension scheme.

 

Policy Background

The Employment and Remuneration Committee (E&RS), a sub-committee of the PCC, discussed the current pension arrangements on two meetings:  on 25th April 2016 and on 17th December 2015.

 

Pastoral staff vs Administrative staff

Christ Church recognises that there is a difference between pastoral staff and staff with a purely administrative function. This difference is reflected pay, the provision (or otherwise) of accommodation, and should therefore also be reflected in pension arrangements.

 

Administrative staff

Administrative staff are (internally by the E&RS) benchmarked against Cambridge University pay scales, typically “Grade 5”, which ranges from “point 34” to “point 44”; or “Grade 6” which ranges from “point 37 to “point 48”.

In comparison with other organisation in Cambridge, for Administrative staff we offer 10% basic salary employer contributions subject to a minimum employee contribution of 3% of basic salary.

 

Pastoral staff

We consider pastoral staff equivalent to curates or incumbents within the Church of England (CofE). The basis of remuneration is the stipend set by Ely Diocese, therefore it is reasonable to look to make pension arrangements which offer a similar level of benefit to the individual as that provided by the scheme used by the CofE.

 

The CofE scheme costs Ely Diocese approximately £11k per annum per incumbent / curate (the costs the identical for both).

It is well-known that the CofE scheme is not offering good value-for-money. However, comparing the benefit provided by the CofE scheme to the individual is difficult because the CofE scheme is a defined benefit scheme, and such schemes are (realistically) no longer available in the commercial market.

Best estimate suggest that contributions in the region of 20% of stipend per annum should lead to a pension pot with sufficient capital that it can offer a benefit to the individual comparable to that offered by the CofE scheme. 20% of stipend is equivalent to a little under £5k per annum for an incumbent.

20% of stipend may appear to be a large percentage, as compared to employer pension contributions offered by commercial companies (anything above 8% is good, and above 12% is very rare), and is much more than that offered to Administrative staff.

 

However:

  • Pastoral staff stipends are lower than salaries for administrative staff, therefore it is appropriate that a higher % figure is used for pastoral staff
    • E.g. as the Office Manager becomes more experienced, their salary will go up to ~£35k, vs stipends which are £25k and under.
  • Commercial companies in Cambridge often make employer contributions of £2800 pa for graduates fresh from university, and contributions of £5000 pa for folk with 10 years’ experience. Current government thinking suggests that even these levels of contribution are insufficient to pay for the costs of retirement. Therefore contributing even £5000 pa is not overly generous relative to the demographic of Christ Church.