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Church of England Pension Board Posts Best Year on Record with Returns of 21.2%

Fund doubles down on ethical investing, returns highest since record keeping started in 2003

By Vishesh Kumar

The Church of England Pension Board announced returns of 21.2% for all pension assets, its best performance since record keeping started in 2003, according to a report published on Wednesday. Funds under management totaled 2.3 billon pounds.

The fund’s largest position was in global developed market equities, at 55%, with property second at 11%, and small cap equities third at 10%.

Its top five equity investments were Apple, Alphabet, Exxon Mobil, Microsoft, and Wells Fargo.

The fund continued to emphasize ethical investing.

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“During the year, the engagement team continued to meet company representatives on a range of issues of concern,” the report said.  “These issues included human rights, climate change, tailings dams, risks around reporting on joint ventures within extractive companies, promotion of responsible alcohol consumption and community health and safety, and environmental concerns around mining activity.”

Executive compensation was a key focus in its portfolio holdings.

“During 2016, in line with the National Investing Bodies’ executive remuneration policy, we continued to vote against the majority of remuneration reports and publicly called upon company remuneration committees to exercise better judgement when recommending reports to shareholders,” the report said. “A number of high-profile advisory votes went against board recommendations and we expect executive remuneration to remain the most prominent issue in the 2017 voting season.”

The fund also continued to develop the Transition Pathway Initiative (TPI), an asset-owner led initiative supported by asset managers and owners with 2 trillion pounds under management. TPI assesses how companies are preparing for a transition to a low-carbon economy.

“The initiative came about as a result of the National Investing Bodies’ climate change policy, which committed us to engage more intensively with companies on climate change and assess whether they are taking seriously their responsibilities to assist with the transition to a low-carbon economy,” the report said.

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Home > News > Newsmakers > $1.3 Billion Needed for Chicago Pension Funds, Debt Payments, KBRA Says
Newsmakers

$1.3 Billion Needed for Chicago Pension Funds, Debt Payments, KBRA Says

The bond rating agency suggests positivity, despite rocky road ahead.

By Chris Butera

Chicago will have to gather $1.3 billion in new revenue and spending reductions by 2023 to meet scheduled contributions to four pension funds and make rising debt payments, according to a report published TK from Kroll Bond Rating Agency (KBRA).

The bond rating agency reported that, in addition to the $1.3 billion, Chicago Public Schools (CPS) and other local taxing bodies may need an additional $339 million to meet those costs.

KBRA also reported that new taxes and spending reductions for the city, CPS, Cook County, and additional governments could end up becoming $1.66 billion by the same year —a move that the KBRA feels “will be politically painful, but affordable.”

Depending on the economy and if CPS receives the extra money it needs from state government and the city’s overall finances, this outcome could change for the better.

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According to the Chicago Tribune, the city has already approved $1.4 billion in new annual revenue since Mayor Rahm Emanuel took office in 2011. The $823 million bulk of this revenue is from higher property taxes, a new water service tax, and an increased 911 fee—all of which are being used to increase pension contributions. A majority of the rest of the money is from increased water service fees dedicated to upgrading the city’s water system. In order to cover education costs, construction, and pension contributions, CPS has increased property taxes by more than $477 million since 2011.

Despite the gloomy outlook, KBRA is optimistic, giving Chicago a higher bond rating than other agencies—such as Moody’s, which warned of another debt downgrade earlier this month. The agency also feels that the state will eventually recover, although it will continue to be a bumpy ride.

“While tax burdens on households and businesses in Chicago may grow, actual property tax rate increases will likely be much less than many analysts project and, in KBRA’s opinion, will not result in total tax burdens that are so high as to impact the city’s position as the Midwest regional capital of commerce, culture, business, and education,” the KRBA said in a statement. “The challenges and risks related to the city’s severely underfunded pension plans are reasons KBRA rates Chicago BBB+ instead of a higher rating commensurate with the depth and diversity of its underlying economic base, effective management, improved financial controls, and ample reserves—conditions not present in situations like Detroit, Puerto Rico, and Stockton.”

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