17 April 2007
The Church Commissioners achieved a return of 13.6 per cent on their investments in 2006. This exceeded the return of 10.5 per cent from the fund’s comparator group*.
Over the past ten years, the Commissioners’ total return on their investments has averaged 10.7 per cent per year, placing them in the top two per cent of funds in the comparator* group for the decade.
This return compares with an average return of 8.0 per cent per year from that group, average earnings increasing by an average of 4.2 per cent a year and an annual increase in the retail price index of 2.8 per cent over the ten year period.
As a result of this above-average performance over the last ten years, the Commissioners’ asset value is £5.36 billion, and the fund is able to distribute £43 million more each year to the Church than if the investments had performed only at the industry average over the last ten years.
Since 1997, following the adjustments of the early 1990s, the Commissioners have aimed to increase their non-pension distributions to the Church in line with average earnings. In 2006, those distributions totalled £69.9m.
“Our long-term objective is an average annual return at least five per cent above inflation and we are pleased to have exceeded that not just in 2006 but over the last five, ten and twenty years,” said Andrew Brown, Secretary of the Church Commissioners. “The sound long-term performance reflects both our well-balanced portfolio and the strength of the Commissioners’ investments.
“The Commissioners exist to serve the Church and we are pleased that the good performance enables us to continue to fulfil our responsibilities and make a contribution to the work of every diocese in the Church of England.”
Serving the Church
Details of how the Church Commissioners support the Church of England’s ministry are set out in the Annual Report, which will be published in May. It will detail the contribution that the Commissioners make to the ministry of each of the Church’s 44 dioceses, in addition to their major role of funding all clergy pensions earned before 1998. This contribution includes supporting the ministry of bishops and cathedrals, as well as parish ministry particularly in poorer dioceses.
In 2006, the Church Commissioners continued to provide significant support for the Church's ministry, especially in areas of need. Since it began in 2002, the parish mission fund has given dioceses extra resources for parish ministry totalling £19.6 million, including £4.5 million in 2006.
The Commissioners' total expenditure in 2006 was £172.6 million (£166.1 million in 2005) or some 17 per cent of the Church’s spending. Total non-pensions expenditure, including support for ministry within dioceses and for the ministry of bishops and cathedrals, totalled £69.9 million in 2006 – an increase of £4.1 million on the previous year.
The main items of expenditure were (with 2005 figures in brackets):
• £102.7 million (£100.3 million) for clergy pensions based on service before 1998
• £32.4 million (£31.5 million) for parish ministry, primarily to less-resourced dioceses
• £24.5 million (£20.7 million) for supporting bishops' in their diocesan and national ministries, comprising £4.6 million (£4.5 million) for stipends, £11.3 million (£10.4 million) for office and working costs, and £8.6 million (£5.8 million) for housing
• £6.6 million (£6.6 million) for stipends of cathedral clergy and grants to cathedrals, mainly for staff salaries
• £6.4 million (£7.0 million) for other support including administration and restructuring costs, support for other Church bodies and church buildings
Notes to Editors:
*(See para one) The comparator group is the WM All Funds Universe. It is a collection of the investment results of UK pension funds and is widely used as an independent measure of the performance of funds. There were 240 funds in the 2006 Universe and there were 185 and 153 funds that have been included in the sample for the last five and 10 years respectively.
The Church Commissioners
The Church Commissioners are trustees either elected from General Synod or nominated for their specific finance, property, securities, heritage and legal skills by the Archbishops and the Crown. They currently comprise Archbishops, bishops, deans, clergy and lay members of the Church of England.
• The Commissioners fund all clergy pensions earned before 1998. (Pensions earned since then are paid from the separate Funded Scheme, which is funded by contributions from dioceses and other Church bodies)
• The Commissioners' fund is a closed fund, taking in no new money.
• Actuaries assess the Commissioners' fund in detail every three years (with yearly reviews) to advise on how much they can safely plan to spend.
• Administrative costs have been reduced by approximately one third in real terms in the last 10 years.
The Church Commissioners manage assets worth around £5.4 billion on behalf of the Church of England. The portfolio of assets includes stock market investments, and commercial, residential and rural property investments.
The Commissioners’ mission is to support the Church of England's ministry, particularly in areas of need and opportunity. Their main responsibilities are:
• to obtain the best possible long term return from a diverse investment portfolio in order both to meet their pension commitments and to provide the maximum sustainable funding for their other purposes such as support for the work of bishops, cathedrals and parish ministry.
• to administer the legal framework for pastoral reorganisation and settling the future of redundant churches.