Adjustments
Each year we adjust your pension to keep Church Pension 'fully funded'. This could mean adjusting your pension up, or down.
Adjusting your pension
Each year we adjust your pension to keep Church Pension financially secure
How we adjust your pension
Each year, we review and adjust your pension to help keep Church Pension financially secure for all members.
Our aim is to increase pensions over time, helping your income keep up with the cost of living. We use the Consumer Prices Index (CPI) as our measure of inflation, but these increases are not guaranteed.
How decisions are made
Every year, an independent financial review, called an actuarial valuation, checks the overall health of the scheme.
This looks at whether we have:
- more than enough funds to pay everyone’s pensions, or
- a shortfall that needs to be addressed
Based on this assessment, pensions are adjusted accordingly:
- If the scheme is in a strong position, pensions can increase
- In more challenging circumstances, pensions may be reduced
What this means for you
Because of how the scheme is designed, your pension can go up or down each year, even after you have started receiving it.
While decreases can happen, the long-term aim is that increases outweigh reductions over time, helping your pension grow overall.
What is the annual check doing?
Each year, we carry out a financial check to keep Church Pension in good balance, making sure we have the right amount set aside to pay everyone’s pension.
A simple way to think about it is like saving for a future goal.
Imagine you need £1,000 in five years’ time. You wouldn’t need to save the full £1,000 today, because your savings can grow with interest. If things go better than expected and you are now on track to have £1,050, you could afford to use that extra £50 now.
How this applies to your pension
Church Pension works in a similar way, just on a much larger scale. Each year, we assess:
- how much money we need to pay everyone’s pensions in the future
- how much we already have set aside
From there:
- if we have more than we need, we can pass that benefit on to you through higher pensions
- if we are not quite on track, we make careful adjustments to keep things sustainable
This yearly check helps ensure the scheme stays fair, balanced, and able to support members both now and in the future.
When things go well
If the scheme has more money than we need, we will increase your pension to reflect this.
We always look at the rate of inflation and aim to match it where possible, helping your pension keep its value over time. In particularly strong years, we may even increase your pension by more than inflation, so you can share in the scheme’s good performance.
For example, if inflation is 3%, your pension might increase by 3.5%.
All increases are applied to members’ pensions on 1 April each year.
This approach means that when the scheme performs well, you directly benefit, helping your income grow over the long term.
When increases are lower than inflation
There may be some years where we are not able to increase your pension in line with inflation. If the scheme has less funding than expected, increases may be lower than inflation. For example:
- if inflation is 3%, but investment performance has been weaker than expected,
- your pension might increase by 2.5% instead
Any changes are applied to all pensions on 1 April each year.
In exceptional situations, if funding levels fall significantly, we may need to reduce pensions to help keep the scheme sustainable for everyone.
This approach is designed to balance fairness today with long-term security, so the scheme can continue to support members both now and in the future.
What if my pension needs to be reduced?
We understand that a reduction to your pension would be difficult. That is why we would only ever make this decision when it is necessary to protect the long-term security of Church Pension for all members.
How we manage reductions
In the rare event that a reduction is needed, we aim to ease the impact as much as possible.
If your pension needed to be reduced by more than 5%, we would normally spread the change over two or three years, rather than applying it all at once.
For example a 6% reduction might be applied as 2% per year over three years
Keeping things under review
We do not set changes in stone. If conditions improve after the first year, we will review the situation. We will reduce the planned cuts, or even reverse them, if we can.
Our priority is always to strike the right balance, protecting your pension today while ensuring it remains sustainable for the future.
When is my pension adjusted?
We adjust pensions on 1 April each year.
What is my adjustment for April 2027?
As Church Pension started in 2027, there was no adjustment to pensions for this year.
Historic adjustments
Here are the recent adjustments.