THE Church of England Pensions Board has been accused of “grotesque profiteering” by the son of a priest, who says that the board is set to triple its money on an equity-sharing mortgage agreed more than 30 years ago.
The Revd Ian Forbes Black, who died in 2017, and his wife, Jean, who died in January, had struck a loan agreement with the Pensions Board in 1991, in which they borrowed £40,000 to help with their purchase of a retirement property in north-west Cumbria.
The terms of the agreement meant that the Pensions Board retained a two-thirds share in the ownership of the house, which was bought for £60,000, with interest on the loan taken out of Mr Black’s pension.
After Mrs Black’s death this year, the couple’s children are attempting to buy the Pensions Board’s share, and have been quoted a price of £66,600, reflecting the valuation of the house at £100,000.
Dr Angus Black, the couple’s son, wrote to the Church Times to explain the situation, writing that he was “perplexed as to the ‘Christian’, moral and ethical justification for this grotesque profiteering from my vulnerable parents, who had both given a lifetime of dedication and service to the Church”.
A spokesperson for the Church of England Pensions Board said on Wednesday: “The mortgage scheme was designed to help clergy become homeowners at a time when it was difficult to gain financing with market providers. We always act in the best interest of all our customers, offering support and help as circumstances change throughout retirement.”
The original loan agreement shows that the interest rate was set at three per cent above the base rate, “or such other rate as the Board shall determine from time to time”.
But the interest rate increased, year on year, for the duration of the loan, sending it “significantly above” three per cent, Dr Black said. It continued to rise even when Bank of England interest rates fell during the period.
The interest accrued over the past year is £2016, Dr Black told the Church Times: a a figure that amounts to 10.1 per cent of the amount of the original loan.
The total value of the repayments made over the period amount to at least double the value of the original loan, he said, though it is understood that some of the figures referred to by Dr Black are disputed by the Pensions Board.
Payments on the loan were taken directly from his father’s pension packet, and continued to be taken when the pension passed to his mother, in 2017. The rate of interest was set by the Board. “My late mother, Jean, was just having to meet the demand. She appeared to have no control over it, because it was taken from her pension,” he said.
The case mirrors that of the Revd Eric Quinn, which was reported in 2014 after his daughter contacted the Daily Mail (News, 4 April 2014).
Mr Quinn was paying 8.6 per cent interest on his loan, which was more than twice the average at the time. As in the case of Mr and Mrs Black, the loan had originally been taken out to help him and his wife to purchase a house.
The equity-sharing mortgage scheme ran from 1983 until 2008, with interest rates set by reference to increases in clergy pensions — an arrangement generally favourable to those who joined the scheme, according to the chief executive of the Pensions Board in 2014, when Mr Quinn’s case was in the news.
Speaking on Tuesday, Dr Black said that he was “staggered and shocked by the injustice of the agreement”; he felt that it neither seemed like a normal loan, owing to the equity-sharing arrangement, nor a mortgage, as it did not lead to the accruing of a greater share of ownership.
It is understood that opportunities to buy more equity were available as part of the scheme, and that customers were required to seek legal advice before taking out a loan.
Read Dr Black’s Letter to the Editor here