Home » News » Bush Telegraph » Issue archive » November 2002 » Finance

Finance Newsletter

Statistics Forms

We still await forms from several parishes. Those parishes who have not yet completed their forms should return them urgently. The information is to go to the Council of Assembly meeting at the end of November. We will continue to hound parishes who have not responded.

Amalgamated Investment Fund

The interest rate paid on deposits with the Amalgamated Investment Fund remains at 6.75% per annum.

Ministers Mortgages

The interest rate payable on Ministers' mortgages remains at 7.49% per annum.

Bonus Interest

As part of their on-going management of the Amalgamated Investment Fund the Church Property Trustees have reviewed the level of reserves required by the AIF. Reserves are held to protect the AIF against the effects of fluctuations in the market value of investments. Changes in market values are driven by changes in interest rates.

Recent changes to the manner in which the Government, through the Reserve Bank, operates monetary policy have reduced the frequency and amount of interest rate fluctuations. The period of increased stability in interest rates has largely followed the introduction of the overnight cash rate by the Reserve Bank.

The stability of interest rates and the better than expected financial result for the financial year to June 2002 has resulted in the reserves of the AIF being significantly higher than is required by prudent financial management. The Trustees have therefore decided that a bonus interest payment amounting to $1 million will be made to depositors who had funds in the AIF during the 2002 financial year. The bonus will be apportioned to depositors in the ratio of their interest payment to the total interest payment for the year. Depositors will receive approximately 20 cents for each dollar of interest received in the financial year. Payment of the bonus should occur during November.

Seniority Allowance Levy

Parishes will be notified later in the month, by letter, of the roll number to be used to calculate their Seniority Allowance Levy. The roll number used is at 30 June 2001. If you disagree with the roll then you should notify us immediately so we can get the roll numbers correct for the calculation of the levy rate. Credits for incorrect numbers are extremely unlikely once invoices have been issued.

Amalgamated Investment Fund

With the payment of a special bonus there are likely to be parishes that in the past have not dealt with the Amalgamated Investment Fund who may now see it as an ideal home for their surplus funds. For my information section this month I discuss in more detail the operations of the Fund for those who may wish to invest in it

The Amalgamated Investment Fund was set up by Act of Parliament with that Act regulating the conduct of the affairs of the Fund. The Fund is administered by the Church Property Trustees who have appointed a sub-committee called the Investment Committee to oversee the affairs of the Fund. The Investment Committee meets monthly to review the financial performance of the Fund, make investment decisions and set the interest rate paid by the Fund. The Investment Committee includes persons who are very experienced in the operation of financial markets and who hold (or have held if they are retired) senior positions in financial institutions as testament to their experience and skill.

The Financial Services Department of the Church performs day to day administration of the Fund. The FSD keep the records of the Fund and pay and receive the cash that flows into and out of the Fund. Requests to process a transaction received prior to 3.00pm are processed on the same day. We accept instructions by phone, email or letter. FSD also buy and sell securities in accordance with instructions issued by the Investment Committee.

The Fund accepts deposits from parishes, presbyteries, other organisations associated with the Church that has charitable status and the General Assembly. This money is used to purchase high quality interest bearing securities. Interest earned from these investments is used to pay interest to depositors. Securities must have a Standard and Poors rating of at least A. This rating denotes a high quality investment with a low risk of default. The Fund has at least $2 million of its money invested at call so it is able to meet all reasonable demands for repayment of deposits. The balance of the fund is invested at varying maturities with the average life of the total portfolio being influenced by whether interest rates are rising or falling. Generally the average life of investments is about a year.

Deposits in the Fund are normally held at call. This means that they can be withdrawn immediately without interest penalty. A fixed term deposit can be arranged if required. A parish may have more than one account with the Fund if they find that a convenient arrangement.

The interest rate paid on investments is reviewed monthly and any changes to rates are effective from the first day of the month following the review. In setting the interest rate the Investment Committee has regard to actual Fund earnings and market interest rates. The current rate of interest is shown in this monthly newsletter. Interest earned on deposits is, at the discretion of the depositor either credited to an AIF account or paid to a parish bank account quarterly for quarters ending March June September and December. The actual interest payment occurs a few days after month end. Interest rates paid over the last year have been in excess of the overnight cash rate often by more than 1%. While better interest rates can be found those investments carry a significantly higher risk of default.

The Fund has a prudent level of reserves. The reserves can be used to supplement the rate of interest paid on deposits or offset losses on the market value of investments. The law governing the operation of the Fund only permits the use of reserves for these two purposes.

As a charity the Fund does not pay tax. To preserve the tax-free status of the Fund it does not accept deposits from individuals. The Fund also has very low overheads. These two factors contribute to the good returns achieved.

Parishes wishing to deposit funds with the AIF should contact either Sulupo Nanai or myself in this office. We will give you full details of the simple steps required to make an investment. There is not a form to complete.

Geoffrey Bell
Manager, Financial Services