The Church of England's pension scheme succumbed to the "cult of equity" and sank 100 per cent of its investments into stocks towards the end of the 1990s bull market, a number of newspapers are suggesting.
Shaun Farrell, chief executive of the Church of England Pensions Board, told the Financial Times that the collapse of share prices had driven a "huge great hole" in the finances of the scheme, which was created in January 1998. But he said the scheme had invested in equities because its pay-out date was a long way off and "equities will give you the highest returns over the long run".
An independent pensions analyst, John Ralfe, has published a breakdown of the troubles of the Church of England's pension scheme.
He told the Daily Mail: “The Church's pension problems are largely self-inflicted since, astonishingly, the scheme has an asset allocation of 100 per cent equities - the riskiest allocation of any UK pension scheme.”
The exclusive investment in equities - in other words, shares on the stock market - was hard to understand, he said.
“Why does the Church take such a reckless approach and bet 100 per cent of contributions from hard-pressed parishes on the stock market?' he asked.
The Church has however, benefited from the speculation in commodities over the last few years. Whilst it has hit some of the poorest countries in the world hardest, the speculation has driven up the price of gold and oil, leading to rises in the share price of the Church’s substantial investments in mining and oil companies.
Despite its campaigning against the effects of climate change, the Church’s two largest equity investments are in Shell and BP.
Last week, a report by church and human rights groups also revealed that the Church was profiting from mining company BHP Billiton, which faces accusations of human rights abuses and environmental degradation.
The Church has also lost a substantial amount by investing in banking shares. It has substantial shareholdings in HSBC, Barclays, Lloyds and RBS.
Its other investments include a £22 million investment in Nestle. It has also invested in the largest listed hedge fund Man Group and operated a hedging programme to sell sterling.
Shortly after senior church leaders spoke out against “city bank robbers” in the wake of the financial crisis, it was revealed that the Church has also been involved in a stock lending programme, which enables the short-selling of shares.