Ironically, one of the threats the Anglican Church of Canada holds over clergy considering extricating themselves from its tender embrace to join ANiC is that they would be jeopardising their pensions by leaving.
As it turns out, clergy may be jeopardising their pensions by staying.
From here:
The Anglican Church of Canada is asking members of its pension plan to vote in favour of a proposal that would buy it more time before having to top up its underfunded pension plan by hiking premiums or cutting benefits.
By law, the plan must have the support of two-thirds of members before government will consider giving their OK to the proposal. A vote is scheduled for Sept. 6 in which the plan members hope to get permission from its active, inactive and retired membership.
[….]
Pension liabilities are calculated in two broad ways. They are valued on a “going concern” basis (that measures the plan’s health on the assumption it will operate indefinitely) and on a “solvency” basis — which measures the plan’s ability to pay all its debts if it were liquidated immediately.
On the first count, the church’s plan isn’t faring too poorly. At the end of the church’s last fiscal year, the pension plan had $602.8 million in assets, but a $28.7 million shortfall. Still, that’s considered 95 per cent funded over the long term. On the second count, however, the plan faces a cash crunch. The Anglican Church’s pension plan is only 70.5 per cent funded on a solvency basis were it to be wound up tomorrow.
The plan’s administrators are asking for a three-year extension on having to address that gap. The hope is that by then, the plan’s finances will have improved, no doubt helped along by rising interest rates that improve the plan’s valuation.
“With funding relief, we will have three years to try to improve our plan’s funding level,” the plan administrators told pension members in a recent letter. “At the end of three years, we will do another valuation of the plan. If there is still a solvency funding shortfall, we will likely have no choice but to cut benefits.”
The church’s pension plan returned 13.2 per cent last year, and has averaged 7.5 per cent per year for the past decade.
A spokesperson for the Anglican Church of Canada declined to comment on the story.
It is possible that the pension benefits may be reduced by 25% three years from now. Nobody needs to be happy about the possibility of receiving a reduced monthly payment.
In many cases, when corporations (or recently, American cities) have been forced into receivership, the employees’ pensions and benefits were at risk, or disappeared altogether. I am therefore having trouble feeling sympathetic about this.
The average annual pension paid to General Synod Pension Plan retirees is $14,712.00. This amount is not very much. Anonymuse, can you retire with this size of pension benefits?
I thought my point would be relatively obvious. I thought wrong. The point really doesn’t have anything to do with how small the average pension is. I’ll leave that with you.
BTW, I also guess you have no idea how many millions of Canadians have no pension at all.
No doubt, it is challenging for any person to live with no pension at all. To receive an annual pension of $14,712.00 is nothing to be proud of either. One of my cousins is a retired Anglican priest who is still working part-time to help meet daily expenses, and he is 75 years old.
Michael, you can cry me a river!
I exist on two half government pensions, for which I am grateful. I also have three children under the age of 12.
Your cousin needs to cut back on some of the luxuries and he will get by just fine!
My cousin and his wife are renting a small apartment because they have no money to buy a condo after his official retirement, and his 71 years old wife doesn’t work outside the home. They no longer owe a car. They paid for their two kids’ university education in the States. They do watch their pennies. We all know that nobody gets rich serving God in a Parish.
They did the decent thing by their kids, and that is where their condo/money went. Non-resident tuition fees in the US are astronomical…
I hope the kids appreciate that.
Even so, they are better off than many people that I know.
Sounds like this pension plan is what is known as a “defined benefits” plan, the type in which the employer guarantees the amount of benefits the retired employees shall receive, no matter what! Very few people in the private sector have such a generous plan. It is practically the norm for government employees, and also unionized employees of very large corporations (i.e. the CAW).
That this pension plan has ended up in this condition is, in my opinion, an indication of incompetent management. Someone should be fired over this.
Grab some popcorn and sit back for the court challenge?
AMP, I am very interested in your comment, because of recent articles I have written on Anglican mismanagement.
Could you provide a bit more information? In confidence if you wish to malachy@saintmarymagdalene.ca.
Defined benefit pensions can become underfunded when stock values go down… as they are now. They can be fully funded one year and underfunded the next simply by the value of the investment decreasing. Many corporate pensions are currently underfunded because of the past few years of low stock performances. When stock prices rise, the corporation (and employee) can make smaller contributions in order to ensure that the pension is fully funded.
It does make some sense to give a 3 year delay period as this can be considered sufficient time for stocks to re-bound. Google “pension” “underfunded” and “delay” and you will see that there are MANY organizations doing exactly this.
2008 and 2009 were not good years for many Pension Plans in Canada.
It is very sad for some retired priests who have to work part-time to help pay for their daily expenses. On the subject of retirement, I personally do not believe in mandatory retirement of any age. I believe that a person should be allowed to work as long as he or she has the health, skill, competence, energy, and interest to perform the duties well. For example, Dr. Michael DeBakey of the Baylor College of Medicine maintained a perfectly huge surgical practice until the age of 90.