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Church Commissioners announce audited results for 2008

12 May 2009

The Church Commissioners intend to continue planned levels of support for Church of England dioceses through to the end of 2010, despite a year of declining asset values.

Audited results published today in the 2008 Annual Report show a negative total return of 19.6 per cent in 2008  - an improvement on earlier unaudited figures, released in February that indicated a negative return of around 22 per cent.*

Over the past 10 years, the Commissioners’ total return on their investments has averaged 5.7 per cent per year, ahead of the 3.7 per cent return of the WM All Funds universe comparator**. In the last year, the Commissioners’ return of -19.6 per cent was less than the WM All Funds return of -17.2 per cent.

The total returns of the FTSE100 index and the IPD UK commercial property universe were around minus 30 per cent and minus 22 per cent respectively during the year.

 

For several years the Commissioners have operated, with the support of their actuaries Hymans Robertson, a smoothing arrangement in terms of distribution. They have paid out less to dioceses than might have been possible in good years in order to keep funding back to maintain a steady level of contribution to the Church’s mission and ministry.

The Commissioners hope to maintain the current level of support for dioceses in cash terms into 2011-13. In line with the normal practice, the position will be reviewed at the end of 2009.

Andrew Brown, Secretary to the Church Commissioners, said: “In a very difficult financial situation, we believe the Commissioners have achieved creditable returns for our beneficiaries.

“Our policy of holding the majority of our assets in shares and property has benefited the fund’s performance in nine of the last ten years. Relative performance suffered in 2008 as we held very few bonds during the year but weighted the fund towards real assets to match our - mainly salary-related - liabilities. We continue to diversify the nature and type of our investments.”

The Commissioners’ asset value now stands at £4.4 billion, with the fund currently being able to distribute £26 million more each year to the Church than if the investments had performed only at the industry average over the last ten years.

Over the last five years, the Commissioners have outperformed the comparator group, achieving returns of 6.2 per cent per year, against a comparator of 5.5 per cent.

The Church Commissioners manage the historic resources of the Church of England and contribute around 17 per cent of the cost of running the Church – the vast majority of the costs are met by the generosity of local parishioners.

The Commissioners’ activities in 2008 included providing £41.8 million towards parish-level ministry and mission projects around the country. This compares with £32.9 million in 2007.

Investments

The key elements of the Church Commissioners’ investment portfolio, as at December 31st 2008 are set out below. The levels at the end of December 2007 are in brackets.

Investments, including fixed interest, UK and overseas equities - £2,661.4million (£3,601.6million); Investment properties, including urban, let land, strategic land and global indirect property holdings - £1,300.8 million (£1,598.0 million); Other net assets, including loans, short term deposits and cash - £402.3 million (£474.8 million).

Serving the Church

Details of how the Church Commissioners support the Church of England’s ministry are set out in the Annual Report published today. It details 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 2008, 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 totalling £29.0 million, including £4.8 million in 2008. A further £5.0 million is to be distributed for this purpose in 2009.

A new funding stream was created in 2008 and is now live. Following consultation with dioceses, £7.25 million has been earmarked for investment in areas of new housing and other developments. It has been allocated between 15 dioceses facing significant challenges and opportunities and distribution began in 2009.

The Commissioners' total expenditure in 2008 was £192.7 million (£177.8 million in 2007). Total non-pensions expenditure, including support for ministry within dioceses and for the ministry of bishops and cathedrals, totalled £84.8 million in 2008 – an increase of £12.5 million on the previous year.

The main items of expenditure were (with 2007 figures in brackets):

• £107.9 million (£105.5 million) for clergy pensions based on service before 1998

• £41.8 million (£32.9 million) for parish ministry, primarily to less-resourced dioceses

• £28.4 million (£24.9 million) for supporting bishops in their diocesan and national  ministries

• £7.3 million (£6.8 million) for stipends of cathedral clergy and grants to cathedrals, mainly for staff salaries

• £7.3 million (£7.7 million) for other support including administration and restructuring costs, support for other Church bodies and church buildings

 

Notes

The full report of the Church Commissioners for 2008 is available on the Church of England website.

*(See para two). The full text of the Commissioners statement, released on February 27th 2009.

**(See para three). 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 229 funds in the 2008 universe, and there were 189 and 165 funds that have been included in the sample for the last five and 10 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) to advise on how much they can safely plan to spend to maintain sustainable distributions.

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

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 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 from General Synod: four bishops, three clergy, four lay people;

• two deans

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

• 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.