The Church of England Pensions Board reported a 9.4% total return for all pension assets in 2017, easily beating its target returns and raising the total asset value of its pension funds to £2.6 billion ($3.41 billion).
The return was significantly ahead of its target, which is inflation (as measured by the retail prices index) plus 3%. Over the past 15 years, net returns for the plans’ assets, after fees and costs, are 9% per year, which is the equivalent of inflation plus 6%.
Total income for 2017 was £28.8 million, up from £28.4 million in 2016, while income from charitable activities was £19.9 million, compared to £19.6 million the previous year. Meanwhile, the pension deficit liability was £1.5 million at the end of 2017, down from £1.9 million at year-end 2016.
The Church of England Pensions Board is the trustee of four pension funds: the Church of England Funded Pension Scheme, the Clergy (Widows and Dependants) Pension Fund, the Church Workers Pension Fund, and the Church Administrators Pension Fund.
The board provides retirement services for approximately 40,000 people who have served or worked for the Church of England, including more than 10,000 retired clergy.
According to an independent audit, the church has “a significant level of long-term debt liabilities on the balance sheet (£99.6m), which require servicing and which if called in would require the group to sell a large proportion of their property portfolio.”
The board holds a large number of properties on the balance sheet value at £224.6 million, which it uses to meet its charitable objective of providing housing to retired clergy. The properties are held as security against the funds’ liabilities.
The board also manages the Secretariat to the Ethical Investment Advisory Group (EIAG) on behalf of the Church of England’s national investing bodies, which include the Church Commissioners, the Church of England Pensions Board, and the CBF Church of England funds managed by CCLA Investment Management Ltd.
The role of the EIAG is to advise the national investing bodies on ethical investment policies. It currently does not invest in companies that have significant involvement in gambling, the production and sale of alcohol, tobacco, defense, or high-interest-rate lending.
In late 2017, the board announced a new policy on investing in extractive industries.
“Ethical investment considerations are very important to us when investing the pension funds,” Jonathan Spencer, chair of the pensions board, said in a release. “The new policy acknowledges the positive contribution that mining can make to development. However, it also highlights that extractive companies are particularly vulnerable to poor governance and ethical controversy.”