The Church of England leapt ahead of average UK pension fund performance in 1997 as returns on investment soared to nearly 20 per cent.
The Church Commissioners' annual report shows total return on assets ran at 19.7 per cent against an industry benchmark performance of 16.5 per cent from UK pension funds.
The results look staggering against those from the "big four" fund managers. Gartmore, Schroder, PDFM and Mercury Asset Management returned averages of 14.9 per cent on discretionary funds, according to the Combined Actuarial Performance Service.
The Church's net assets rose last year to £3.84bn from £2.97bn in 1996. The increase is significant because it is the first time that assets have recovered since the Church Commissioners lost £800m in property deals in the 1980s.
Commissioner Michael Coleman says: "The support of church partners and especially the generosity of people in the parishes has enabled us to rebalance our investment portfolio and bring expenditure down to a sustainable level."
Coleman puts the turn-round down to a deal struck last year which means that commissioners are no longer responsible for pre-1998 pensions. Local dioceses have taken responsibility for pensions prior to this date.
But the Church's funds are likely to suffer because of the Government's decision to axe the tax credits on dividends and changes to the ACT regime. Coleman believes the Church will have to boost investment performance further and make more cost savings to maintain its performance following these changes.