Church of England Pensions Board weathers volatile market

In total, all assets across the fund returned 9.4% in 2020, which compares well to the past five years’ average of 10.3% per annum

The Church of England Pensions Board generated 9.4 per cent returns last year, despite “a volatile year for markets” caused by the pandemic.

According to the Pensions Board’s Annual Review 2020 published Tuesday: The global pandemic and accompanying response by governments and central banks, caused sharp movements in the value of our investment holdings over the course of the year.

As a pension fund, some of our assets are invested for growth, and others are invested in a less risky way to back pensions in payment. In aggregate, all assets across the fund returned 9.4% in 2020. This return compares well to the average over the past five years of 10.3% p.a, it says.

The review says, the Pension Board’s public equity portfolio experienced “a turbulent first part of the year”, although it “recovered by December to generate returns of over 10.8%”. Other “growth assets”, such as property, and its “fledgling private equity portfolio”, returned just below 1.3 per cent, however.

These returns were achieved not only in a difficult market environment, but also while transitioning the portfolio to a more diversified and environmentally sustainable structure, the review says. A diversified portfolio helps to weather economic uncertainty, in turn offering more certainty to both members and employers.

The Pension Fund is the trustee of three pensions schemes: the Church of England Funded Pension Scheme, which is the main pension scheme for the clergy, and provides pensions to all clergy for service from 1 January 1998; the Church Workers Pension Fund; and the Church Administrators Pension Fund.

We worked successfully with employers, other national church bodies, and our professional advisers to monitor the financial implications of the pandemic and any pressure on the covenants backing the schemes, the review says. For some employers, this year has been very difficult. However, pension contributions have been maintained throughout 2020.