A summary
Dan Hedley, Policy Director of New Capital Consensus
The Church of England’s clergy pension fund is being painted as a gambler in a casino by John Ralfe in the FT, “doubling or quitting” by running a growth‑oriented portfolio rather than matching its liabilities with long‑dated bonds. That caricature misunderstands both the nature of the Church as an institution and the economics of open long‑term defined benefit saving.
The Church of England Funded Pensions Scheme (CEFPS) is not a closed legacy scheme where the pensions need to be paid, but there are no more contributions coming in. If it were, there’d be some sense in considering sensible de-risking. But this scheme is very much alive and kicking. Its time horizons are immense. It is the liability side of a 500‑year‑old social institution that intends to be around in another 500. For such an entity, the central question is not “how can we ensure that our assets and liabilities align with precision every day of the week?” , but “how do we maximise sustainable real returns over decades while managing risk in the round?”
The church’s sensible approach not only protects the institution’s assets and its current and future pensioners’ security, but also nurtures the economy that its congregations and clergy live in and will retire in, with the lifeblood fuel for growth. This aligns with Scripture in promoting social cohesion and community prosperity. “Let us not become weary in doing good,” writes Paul, “for at the proper time we will reap a harvest if we do not give up” (Galatians 6:9). That is a farming metaphor, not a gilt repo metaphor.
A farmer who refuses to plant because the weather might turn is not prudent; he is failing his vocation. Likewise, a Church that refuses to invest in productive, often illiquid assets because their market value moves around is failing to use its time horizon well. Three points follow.
First, risk is not the same thing as slavishly tracking mark‑to‑market volatility. The true risk to clergy is the long‑run erosion of the scheme’s ability to pay inflation‑linked pensions, which depends on real returns from the underlying economy.
Owning equities, infrastructure and private loans that finance real activity is a rational way to earn that premium over gilts in an ecclesiastical scheme with no end in sight and a long established backer that is not going to disappear any time soon.
Second, full bond‑matching at today’s yields crystallises a large opportunity cost. “Locking in the surplus” is also locking in lower expected returns. Seeing losing huge amounts of value in assets as a win, just because notional liabilities have also fallen is a distortion of reality – losing value is always a real loss to the Church, to its clergy and to its congregation. With losses will always come a higher likelihood that future generations of parishioners must contribute more, or benefits must be cut again, If liabilities can fall, they can also rise again, bringing pain that could be avoided by retaining and building real value. Relying on matched assets like bonds and gilts shifts risk forward in time and onto people who cannot currently vote at General Synod.
Third, a duration‑aware, diversified, growth‑oriented strategy is not the same as recklessness. It can and should include robust stress testing, prudent use of leverage, liquidity buffers, and a clear plan to run risk down if the scheme subsequently matures. But to insist that every scheme must look like a closed corporate DB plan in managed run‑off is to ignore the particular vocation and horizon of the Church.
The Church of England often talks of “intergenerational justice”. In investment terms, that means using its uniquely long time horizon for the benefit of both today’s and tomorrow’s clergy, rather than outsourcing prudence to the gilt market. Sowing for a future harvest may look untidy on a funding update, but it is a far more faithful response to the responsibilities the Church carries.
Exactly the right approach to take! John Ralfe is a 1 trick approach and has been one of the people contributing to the demise of DB schemes
But to play devil’s advocate (a term not found in the Bible; from the Latin advocatus diaboli, an official role known as the “Promoter of the Faith”, established by Pope Sixtus V in 1587 in another church, not the CofE) … would TPR be sympathetic to the Church’s pensions prospects if instead this were a private sector business sponsor with these volume characteristics?
The CofE experienced a long-term, structural decline in attendance, membership, and active parishes over the past several decades up until the pandemic in 2020.
I accept, however, some recent reports have shown post-pandemic recovery in several of the metrics. Yet the overall, multi-decade trend still suggests significant shrinkage.
Here are some key numbers and statistics indicating these trends, primarily sourced from CofE Statistics for Mission and British Social Attitudes (BSA) surveys.
1. Declining Attendance and Membership?
* Decade-Long Decline: In the mid-1980s, active congregational membership was around 1.26 million, falling to 722,000 by 2019.
* Sunday Attendance: Usual Sunday attendance fell from 788,000 in 2013 to 557,000 in 2022, but rising to 582,000 in 2024.
* “Weekly”, as opposed to Sunday-only, attendance in 2024 was 702,000, up from 654,000 in 2022, but still 17% lower than pre-COVID figures in 2019.
* Shrinking Congregation Sizes: The median congregation size is 27, meaning half of churches have fewer than 27 attendees.
* Youth Attendance Decline: By 2024, 32% of churches reported having no children in their worshipping community, compared to 26% in 2019.
* Long-Term Affiliation: The number of census respondents identifying as Church of England has halved in the last 15 years, falling from 31% to 14%.
2. Parishes and Infrastructure
* Church Closures: In the three decades leading up to 2022, approximately 940 Church of England churches closed, with 423 closing in the ten years prior to that date.
* Parish Reduction: Between 2016 and 2021, 278 of the country’s 14,000 parishes disappeared.
* Aging Infrastructure: Over 900 churches are on Historic England’s “Heritage at Risk” register, with a maintenance backlog said to exceed £1 billion.
3. Sacramental and Life Cycle Decline?
* Infant Baptisms: The number of infants baptised in the CofE has fallen by over 30% between 2019 and 2024. Infant baptisms in the CofE had dropped from 72% of all newborns in 1927 to just 8% by 2019.
* Weddings: The number of weddings in CofE churches has continued to decline by around 30%.
* Funerals: The number of funerals conducted in CofE churches was 24% lower in 2024 than in 2019.
4. Age and Demographics
* Aging Congregations: In 2024, 35% of worshippers were aged over 70, compared to 33% in 2019.
* Youth Disengagement: As of 2021, only 4% of young adults (21-25) identified as Christian.
* I’m aware of more recent “opt-in” surveys which claim very large increases in church attendance, particularly among 18-24 year olds, but other surveys based on random samples appear to show that Christian identity and practice are not increasing among young adults in Britain.
* The Labour Force Survey (LFS) measures religious self-identification among more than 50,000 individuals in a typical quarter, across more than 20,000 randomly sampled U.K. households. In 2025, 44% of adults in Britain identified as Christian in the LFS, down from 54% in 2018.
* Yes, some of the CofE’s own 2024/2025 “Statistics for Mission” numbers have shown 4-year consecutive increases from the 2020 pandemic lows (eg a 1.02 million “worshipping community” in 2024, but 9% below 2019).
* Critics suggest these better numbers appear to be a “recovery” of pandemic losses rather than reversal of a 50-year downward trend.
Agree wholeheartedly – John Ralfe is the one asking pension schemes to gamble.
Worse still he has effectively encouraged pension schemes to gamble against the future value of a number used for assumption purposes only. A gamble that so many pension schemes have taken and lost, through LDI or premature buy-ins or buy-outs, with the cost of trillions of pounds to the UK economy, the employment and pension prospects of the very members they are supposed to protect, and leading to the fall of a Government!
I was agreeing with Dan Hedley (I hadn’t seen Derek Scott’s post at that time)
No hard feelings, PO.
As I said, trying to be devil’s advocate, not sticking up for JR.