Tuesday, 14 May 2013

Church Commissioners announce annual results for 2012

Updated Wednesday morning, Thursday morning

The Church Commissioners for England have issued their Annual Report and Accounts for 2012 today, together with a press release which is reproduced below. General Information about the Church Commissioners is available here.

Church Commissioners announce annual results for 2012
14 May 2013

The Church Commissioners have today published their full Annual Report and Accounts for 2012, announcing a 9.7 per cent total return on their investments during the year and confirming the fund’s strong long-term performance.

The Commissioners’ fund is a closed fund, taking in no new money, and has performed in line with or better than its target return of RPI +5.0% p.a. and its comparator group over the past, three, 10 and 20 years.**

Andrew Brown, Secretary to the Church Commissioners, said: “2012 has proved to be a better year for markets following 2011’s challenging environment and we have performed very satisfactorily. The fund grew by 9.7%, comfortably exceeding the inflation plus five per cent return target. The Assets Committee made wise decisions keeping away from certain longer term bonds, within equities our managers significantly outperformed the market and our residential and rural property holdings performed strongly.

“Much of our expenditure, representing 15 per cent of the cost of the Church’s mission, is devoted to clergy pensions, but in partnership with the Archbishops’ Council we aim also to invest in Church growth and in maintaining a nationwide Christian presence, identifying areas of need and opportunity in all contexts.”

The Commissioners - who contributed nearly £210 million in 2012 towards the cost of supporting the mission of the Church of England - manage assets which were valued at £5.5 billion at the end of 2012. More than half of their current distributions meet the cost of clergy pensions earned up to the end of 1997. The generous giving of today’s parishioners accounts for around £700m of the Church’s annual budget.

Writing in the report’s foreword Andreas Whittam Smith, First Church Estates Commissioner, reflected on the long term success of the fund: “The best way to judge the investment performance of an endowment fund like the Church Commissioners is to examine the results over a lengthy period of time. This shows whether the workings parts of the investment process are in good order.

“From 2003-2012 the Commissioners funds grew by 9.1% per annum. This exceeded our target, which was the rate of inflation in the period plus five percentage points, which was 8.3% per annum. Our performance was nearly a percentage point better than that of similar funds.

“Finally, in reviewing past performance, it is interesting to review the 20 year record. It would be difficult not to be proud of it. Inflation ran at 2.9% during the period. Add five percentage points to establish our target: 7.9%. The Commissioners’ assets, however, grew through this long 20-year period by 9.9%. In other words, a substantial amount of extra resources has been created to put at the service of the Church.”

The Commissioners’ overall 9.7 per cent return was achieved against a comparator performance of 8.4 per cent for 2012. Over the past 10 years, total returns averaged 9.1 per cent per year, against the comparator group’s 8.3 per cent per year. Over the past 20 years, the Commissioners outperformed the comparator group with an average annual return of 9.9 per cent against 7.8 per cent.

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

The fund is held in a broad range of assets. Returns contribute to the ministry of each of the Church’s 44 dioceses by: paying 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.

In 2012, the Church Commissioners continued to provide significant support to encourage the growth of the Church’s existing ministries and new opportunities. Along with the Archbishops’ Council the Commissioners have earmarked £12 million (2011-2013) for research and development funding to help understand better which parts of the Church are growing and why, and to seek to develop that growth.

The main items of expenditure were (with 2011 figures in brackets):

  • £120.3 million (£114.6 million) for clergy pensions based on service before 1998
  • £42.2 million (£37.7 million) for parish mission and ministry support, primarily to less-resourced dioceses
  • £31.0 million (£30.8 million) for supporting bishops, including Archbishops, in their diocesan and national ministries, mainly for staff costs.
  • £8.7 million (£8.4 million) for stipends of cathedral clergy and grants to cathedrals, mainly for staff salaries
  • £5.1 million (£4.1 million) for other charitable expenditure including support for other Church bodies, and support costs for pastoral reorganisation.

Notes

Watch the video on the work of the Church Commissioners and the 2012 annual results.
http://youtu.be/yUfDAxtuOog

** as measured overall these time periods by the WM All Funds universe.

The Church Commissioners picked up two awards at last month’s Portfolio Institutional awards: Best charity/endowment/foundation and Best investor in property -
http://www.portfolio-institutional.co.uk/interviews/ellison-picks-up-industry-achievement-gong-at-second-portfolio-institutional-awards/

Update

Three papers write about what the report has to say about Barclays Bank.

Hannah Kuchler in the Financial Times Barclays let down society, says Church
Jill Treanor in The Guardian Barclays has ‘repeatedly let down society’, says Church of England
Victoria Ward in The Telegraph Church accuses Barclays of “letting down society”

Posted by Peter Owen on Tuesday, 14 May 2013 at 12:21pm BST | TrackBack
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Categorised as: Church of England
Comments

Laurence said to me yesterday, "No one comments on the financial posts on TA!" Nor do they.

It was headlines when they lost money, but no plaudits when they make it - but then, gambling is a risky business!

Posted by: Jeremy Pemberton on Thursday, 16 May 2013 at 8:16am BST

Alright, a financial comment: does anyone have any sense of how much the Church Commisioners would have to expand the patrimony before it would be possible to halt the drive towards larger and large multi-parish benefices?

Posted by: Francis on Thursday, 16 May 2013 at 2:32pm BST

The Report mentions that the Commissioners fund about 15% of the total costs of the Church of England - mainly the cost of clergy pensions (for service up to 31 December1997).

If the move "towards larger and large multi-parish benefices" is to be reversed, there needs to be a significant increase in both the number of men and women offering themselves for the Ministry, and the amount being raised by the parishes in order to pay them.

Of course, the increased cost of pensions for those extra people would also fall on the parishes, in contributions to the Pensions Board.

Posted by: John Roch on Thursday, 16 May 2013 at 5:04pm BST

Not a financial comment, but we can't staff these MPBs with stipendiary clergy - we don't have enough. We could staff churches with NSMs and Readers though if were more imaginative...

Posted by: Charles Read on Thursday, 16 May 2013 at 5:54pm BST

John Roch - thank you. Very helpful, if a bit depressing. So unless there is a major reallocation of the Commissioners' spending commitments, there can only be a marginal effect on money available for clergy salaries, and hence on the need for the dioceses to save on salaries by spreading provision ever thinner. Is the number of ordinands a genuinely limiting factor here, or would a number of those presently serving as SSMs go full-time if the opportunity existed, in your opinion? And - if you don't mind me peppering you with questions - is the Commissioners' obligation to fund the pre-1997 pensions, of (presumably) a rather larger institution than the present C of E, going to dwindle as that cohort of retired clergy die, freeing resources for other things? It would be good to be able to believe that the financial equivalent of the US Cavalry might someday come over the hilltop...

Posted by: Francis on Friday, 17 May 2013 at 2:24pm BST

And, just to keep the thread going, does anyone know how real estate in the portfolio is valued? My bet is that the total assets would be worth much more if realty were valued at market prices... And that would also affect return on investment (I'm thinking adversely, but ...)

Posted by: Scot Peterson on Saturday, 18 May 2013 at 9:57am BST
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