Rights and Wrongs

The Church Commissioners have today announced a 15.2 per cent return on their investments during 2010. Their fund has now outperformed its comparator group over the past 10 and 15 years.*

Despite challenging economic times for both the Church and wider society, the Commissioners - who contributed more than £200 million in 2010 towards the cost of maintaining the mission of the Church of England - grew their fund to £5.3 billion (from £4.8 billion at December 31, 2009).

Although most of the costs of the Church's mission are met by the generous giving of today's parishioners, the Commissioners contribute around 17p in the pound towards the total. The Commissioners' contribution is biased towards supporting poorer dioceses.

Today's results show that the Commissioners are able to distribute £26 million more each year to the Church than if their investments had performed only at the industry average over the last ten years, while pursuing their policy of maintaining the real value of the fund.

Andreas Whittam Smith, First Church Estates Commissioner, said: "These results are good news for the Church and its vital role in the life of the nation.

Our mission is to support the Church's ministry, particularly in areas of need and opportunity - we meet that by ensuring our investments achieve sustainable long-term growth."

Returns from the fund, held in a broad range of assets, pay for: clergy pensions for service up to the end of 1997; supporting poorer dioceses with the costs of ministry; funding some mission activities; paying for bishops' ministries and some cathedral costs; and funding the legal framework for parish reorganisation.

The Commissioners manage their investments within ethical guidelines, with advice from the Church of England's Ethical Investment Advisory Group.

Andrew Brown, Secretary to the Church Commissioners, said: "Investment performance was strong across the board in 2010 underlying the importance of our diversified portfolio.

We plan to continue to diversify the fund into other attractive and appropriate asset classes to reduce further the fund's overall volatility.

"In addition, our Assets Committee has adopted a deliberate policy of being more active in terms of the fund's overall asset allocation, adjusting the level of risk depending on the market opportunity."

 The main factors behind the fund's strong performance in 2010 were:

• The Commissioners' higher weighting in shares, particularly those held in companies with overseas interests.
• The bias to higher performing smaller companies within UK shareholdings.
• The low weighting in UK government bonds, index-linked bonds and UK investment grade bonds and higher investment in property compared with the average pension fund.
• The Commissioners' property portfolio achieved a 15.4 per cent return, exceeding its comparator group, the Investment Property Databank.
•  The contribution from the Commissioners' multi-asset fund managers.

The Commissioners' overall 15.2 per cent return was achieved against a comparator performance of 12.7 per cent for 2010.

Over the past 10 years, total returns averaged 6.3 per cent per year, against the comparator group's 4.5 per cent.

Over the past 15 years, the Commissioners outperformed the comparator group with an average annual return of 9.3 per cent against 7.0 per cent.

Investments

The key elements of the Church Commissioners' investment portfolio, as at December 31, 2010, are set out below. The levels at the end of December 2009 are in brackets.

Investments, including fixed interest, UK and overseas equities - £3,485.8 million (£3,167.4 million); Investment properties, including commercial, residential, rural, strategic land and global indirect property holdings - £1,492.9 million (£1,308.2 million); Other net assets and liabilities, including loans, short term deposits and cash - £340.8 million (£339.6 million).

Serving the Church

The Commissioners contribute to the ministry of each of the Church's 44 dioceses, in addition to their major role of funding all clergy pensions earned up to the end of 1997.

This contribution includes supporting the ministry of bishops and cathedrals, as well as parish ministry particularly in poorer dioceses.

In 2010, the Church Commissioners continued to provide significant support to encourage the growth of the Church's existing ministries and new opportunities.

Since it began in 2002, the mission development fund has given dioceses extra resources for parish ministry totaling £39.2 million, including £5.2 million in 2010.

A further £5.4 million is to be distributed for this purpose in 2011.

A fund of £7.25 million, earmarked for investment in areas of new housing and other developments in 2008-2010, has been allocated between 15 dioceses facing significant challenges and opportunities.

Distribution of the grants began in 2009.

The Commissioners' total charitable expenditure in 2010 was £200.5 million (£190.8 million in 2009).

Total non-pensions expenditure, including support for ministry within dioceses and for the ministry of bishops and cathedrals, totaled £88.5 million in 2010, compared with £81.6 million in 2009.

Included within this total, governance and other costs were £2.0 million in 2010 (2009: £1.8 million).

The main items of expenditure were (with 2009 figures in brackets):

• £114.0 million (£111.0 million) for clergy pensions based on service before 1998

• £46.8 million (£42.0 million) for parish mission and ministry, primarily to less-resourced dioceses

• £27.5 million (£26.6 million) for supporting bishops, including Archbishops, in their diocesan and national ministries, mainly for staff costs.

• £7.7 million (£7.4 million) for stipends of cathedral clergy and grants to cathedrals, mainly for staff salaries

• £4.5 million (£3.8 million) for other charitable expenditure including support for other Church bodies, church buildings and support costs for pastoral reorganisation.

 

Notes

*(See paragraph one).

The comparator group quoted 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 203 funds in the 2010 universe, and there were 137 and 119 funds that have been included in the sample for the last ten and fifteen years respectively.

The Church Commissioners

The Church Commissioners play a vital role in supporting the Church of England as a Christian presence in every community.

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 'desktop' reviews in the intervening period) to advise on how much they can safely plan to spend to maintain sustainable distributions.

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 a return from their diversified portfolio of assets, managed within an ethical framework, that will allow them to meet their pension obligations and to maintain, and grow over time, their support for the wider Church including supporting the work of bishops, cathedrals and parish ministry.

The target long-term rate of return is RPI + 5.0% per annum.

• to administer the legal framework for pastoral reorganisation and settling the future of buildings closed for regular public worship.

The 33 Church Commissioners are:

• the two Archbishops;

• three Church Estates Commissioners, who represent the Church Commissioners in General Synod and (Second Commissioner) in Parliament;

• eleven people elected by General Synod: four bishops, three clergy, four lay people;

• two deans;

• nine people who are appointed by the Crown and the Archbishops; and

• six ex-officio members: the Prime Minister, the Lord President of the Council, the Home Secretary, the Secretary of State for Culture, Media and Sport, and the Speakers of both Houses of Parliament.

History

The Queen Anne's Bounty and the Ecclesiastical Commissioners joined in 1948 to form the Church Commissioners. Queen Anne's Bounty was a charity founded in 1704 to help poor clergy.

The Ecclesiastical Commissioners were given the estates belonging to bishops and cathedrals, so they could fund their ministry as well as the Church's ministry into new urban areas.