Clergy pensions are for stipendiary clergy and licensed lay workers.
You usually join from the day you start stipendiary ministry. Your pension is a ‘defined benefit’ pension. How much your pension is depends on your stipendiary service and the National Minimum Stipend.
You can find out everything you need to know about your pension in our Members' Guide below.
CEFPS Members Guide 2017
Boost your retirement income
You do not have to pay anything, but you can boost your retirement savings by paying Additional Voluntary Contributions (AVCs).
AVCs are a tax-efficient way to boost your retirement income. We invest your AVC pot with Legal & General, and you can decide how you want your savings invested.
If you are thinking of paying AVCs, first decide how much you would like to pay. Your AVCs are taken from your stipend or pay before tax. If you are a 20% tax payer and you pay £100 a month, only £80 comes out of your stipend or pay.
You can start, stop, increase or decrease your AVCs whenever you like.
Next, decide how you would like to invest your AVCs. There are two ways you can do this:
- Lifestyle – this takes care of investment decisions for you. Your money is invested in a mix of investments designed to grow your pension while you are still some way from retirement. As you get closer to your chosen retirement age your money automatically switches to safer assets to preserve your pension pot.
- Freestyle – you can make your own investment decisions. This is designed for the more confident investor and offers you more control over where your money is invested and whether or not it switches between funds. Click here to find out more about the investment funds you can choose from.
When you are ready to start paying, complete an AVC application form and send it to us.
You can also pay one-off lump sums. If you want to do this, fill out an AVC lump sum payment form and send this to us. The form has all the details you need to pay a lump sum.
Anything you pay to your pension is tax free, up to a limit. Lump sums come out of your taxed income, so you will need to claim any tax relief on your self-assessment tax return.
When you retire we can usually pay all, or most of your AVC pot to you tax-free. You have other options. Click on the ‘Freedom and Choice’ section to find out more.
Check your AVCs online
Don’t forget you can set up your own account with Legal & General and check how your AVCs are progressing.
You can see your contributions and how you are performing, but you will not be able to make changes to your AVCs. Please come to us first if you would like to make changes and we can do this for you.
What happens when I retire?
When you are ready to retire, the first step is to let your Archdeacon or Bishop know you will be retiring.
As soon you as you have done this let us know your retirement date and we will send you an application form.
We will pay you a pension for life, plus a tax-free lump sum. Your lump sum should reach your bank account on the day you retire.
What happens to my pension if I die?
If you die while in active stipendiary ministry we will pay a tax-free lump sum of 3x the National Minimum Stipend. We will usually pay this to whoever you have put on your nomination form.
If you haven’t filled out a nomination form, or would like to update your form, a copy is below.
If you die before or after you retire we will also pay a two-thirds of your pension to your husband, wife or civil partner.
Freedom and choice
People with a defined contribution pension have greater access to their pension pot.
This does not affect your clergy pension but it does offer you more freedom when taking your AVCs. You can transfer the value of your clergy pension to a defined contribution scheme and take advantage of these options, but there could be restrictions.
If you are thinking of doing this, make sure you understand your options.
You usually have to pay tax if savings in your pension go above the annual allowance. This is currently £40,000 a year.
If you are thinking of paying a large amount into your AVC pot, check your annual allowance first via the HRMC website.
You should also keep an eye on your lifetime allowance. Again, you usually have to pay tax if your lifetime savings go above the lifetime allowance. This is currently £1 million.
If you’re in more than one pension scheme, you must add up what you’ve used in all pension schemes you belong to.
What counts towards your allowance depends on the type of pension pot you get. Find out more about lifetime allowance.
Supplementary Pensions and Augmentation Grants
We can financially support retired clergy, their surviving spouses, or civil partners if their income falls below a level we set and review annually.
The leaflets below tell you more about this and how to apply.
Clergy AVC investment choices
You do not have to make a decision. If you would prefer not to decide how to invest your contributions we will invest these for you in our equity lifestyle option.
What do you want to achieve?
Have a think about what it is you want to achieve from your pension.
If you are some way from retirement you might want to maximise the growth in your savings, so higher risk funds will be suitable.
If you are closer to retirement you may be more concerned with avoiding risk. If so, medium or lower risk funds may be best.
Is there a risk?
Your money is invested in funds which go up and down in line with what they are invested in. There will always be some risk.
Before you decide how you would like to invest your contributions, first assess your attitude to risk. This video can help you.
At first your money is invested in balanced equities. This is mix of higher risk investment funds and the aim is to make the most return on your money while you are still some way from retirement.
Then, as you get closer to retirement your money switches automatically to less risk funds so that by the time you retire
We offer an ethical lifestyle option which works in the same way. At first your money is split between these two funds.
This is mix of higher risk investment funds and the aim is to make the most return on your money while you are still some way from retirement.
As you get closer to retirement your money then switches automatically to lower-risk funds so that by the time you retire
You can pick one or more of these 10 investment funds. Click on each fund to see its performance page.
You can change your investment choice whenever you like. If you choose higher risk funds, you can switch to lower risk funds as you approach retirement.
You might want to pick several funds to spread your risk.
Legal & General take a fee each year to manage the investment fund. This is currently 0.4%.
Gilts and Bonds:
You can find an explanation of the funds at the end of our members guide.
If you would like to change how we invest your contributions, complete an AVC application form and send this to us. We will make sure we invest your contributions the way you want us to.
Our privacy notice sets out how we use personal data that we hold about you and gives information on how to exercise your legal rights. You can find this below.