The Baptist Pension Scheme: a ‘Family Solution’
A new proposal that seeks to substantially reduce the deficit in the Baptist Pension Scheme has been agreed
Details of the proposal, known as the Family Solution, have been shared with ministers and churches.
The key outcomes include:
very significant additional cash contributions to the Scheme being made by the Baptist Union of Great Britain (BUGB)
no change to the monthly deficit contributions for other employers
the deficit contributions are planned to finish in 2028, 6½ years earlier than the previous plan
some agreed changes to benefits for members and their dependants.
The Family Solution follows lengthy and detailed negotiations between the Pension Trustee and the BPS Employer Group (acting on behalf of the Baptist Union of Great Britain (BUGB) and the other scheme employers, which include around 1,300 churches).
The previous recovery plan, agreed at the last valuation of scheme in December 2013, involved employers making pension deficit payments until 2035. Since then the scheme’s deficit continued to rise.
While cautioning there may be yet further challenges ahead, the letter to members and churches stated the Family Solution gives the Baptist family ‘a genuine opportunity to eradicate the pension deficit within the foreseeable future.’ The daily online tracking system provided by LCP, the pensions firm which administers the scheme, showed that the estimated deficit peaked at well in excess of £100m in the summer of 2016, but by the next valuation date of 31 December 2016 it had reduced to £93m. By the end of April 2018 the deficit is estimated to have reduced to £80m due to contributions from employers and positive movements in financial markets. This will be still further reduced when BUGB makes a scheduled £30m contribution at the end of 2018.
Rich Webb, moderator of the Baptist Union of Great Britain Trustee Board, said, ‘Just a few years ago the pension problem felt overwhelming and we wondered if there was any way to deal with a deficit that was threatening to undermine our mission.
‘It is fantastic to see what God has done through the hard work and determination of a number of people, both from BUGB and the Pension Trustee, to enable us tackle this obstacle.
‘The scale of the achievement must not be underestimated.’
The Employers Group was formed in 2015 to co-ordinate the views of the scheme’s employers. Through its roadshows it discovered an appetite to deal with the large deficit now, rather than leave it to a future generation.
Malcolm Broad MBE, Employers Group Moderator, praised the willingness of all involved in working towards this solution.
He said, ‘The “Family Solution” is the culmination of two years’ work by the Employers Group (EG) in an attempt to address the seemingly ever-increasing pension deficit. It’s been quite a journey getting to this point and I want to thank the churches and other employers in the Pension Scheme for their commitment to pay deficit contributions both past and present and into what we all hope will be a shortened future commitment.
‘The EG is immensely grateful for the support received from Associations, Colleges, Unions and Retired Baptist Ministers Housing Society (RBMHS), without whom the Family Solution would not have been possible. The Family Solution has achieved something quite remarkable in Baptists Together and proves that when we harness our combined energies and work together with a common purpose all things are possible under God.
‘Today, we take one big step towards eradicating the pension deficit once and for all, and tomorrow another step, and then another until we reach our goal, with grateful thanks to all those who journey with us.’
A key feature of the Family Solution is a loan of £20m to the Union from RBMHS. The Society will in turn take a loan of £20m from the Baptist Union Corporation (BUC) which will be secured against RBMHS's property assets in order to provide the funds for the loan to the Union. All the interest cost of the loan from the BUC will be covered by interest on the loan from the Union, so there will not be a cost of the scheme to the day-to-day finances or operation of the society.
Bill Johnston, chair of RBMHS, said, ‘The Managing Committee of RBMHS is very pleased to have been of assistance in finding this solution. It has taken a while and involved a lot of discussions and research, as we had to be satisfied that our primary purpose - the provision of housing to retired Ministers and Missionaries, who meet our eligibility criteria - would not be compromised in any way.
‘That we have been able to do this is very satisfying, especially as the assistance we can give is aligned to our primary purpose: providing support to people in retirement.’
Chris Maggs, Moderator of the Baptist Pension Scheme Trustee, stressed that the family solution protects member benefits. He added that even though the solution has been reached, work will continue alongside the Employers Group.
‘As Trustee, our main concern has been the security of member benefits and ensuring we continue to meet the commitments of the Scheme in a fair way. I believe the agreement reached balances these fundamental elements.
‘Our next task is to work alongside the Employers Group to review investment strategy with a view to keeping the recovery plan on track.’
Full details of the Family Solution, including correspondence sent to ministers, churches and tenants, can be found at baptist.org.uk/familysolution