Sometimes a life of virtue does not pay. Years of abstemiousness among its members means that the Church of England’s defined-benefit pension scheme is suffering the same problem as all others, but magnified: its members live even longer than the rest of us.

Shaun Farrell, the secretary of the Church’s pensions board, says: “The clergy is actuarially assessed as living two years longer than the rest of the population. It’s the virtuous lives they lead.”

Ageing ministers are not the Church’s only problem. Old buildings are also a drain on finances. With 45 per cent of the UK’s Grade I listed buildings under its care, the Church faces huge annual bills for their upkeep.

Canon David Houlding of All Hallows Church in Gospel Oak, North London, and his flock must scrape together at least £20,000 a year to keep their place of worship, designed in 1890 by James Brooks, the celebrated Victorian architect, in tiptop condition. Canon Houlding says: “I have a small congregation and large expenses.”

The Church of England is like any other business – a £1 billion-a-year one at that, with 13,000 parishes, 43 cathedrals, 16,000 parish churches and 18,000 active and retired workers. Funding for such a huge organisation comes from two main sources; the collection plate provides about 75 per cent and each parish pays a “parish share” to the local diocese. Each diocese then pays some cash to the national church to cover expenses such as training new priests and mission work.

Over the past five years, parishes have increased their giving by about £100 million to cover higher pensions and stipendary costs, and richer areas must subsidise poorer ones. Fêtes, bazaars and open days, Canon Houlding says, remain vital ways of bringing in extra funding. “My parishioners don’t just keep me; they pay over the odds to keep other clergy for parishes that couldn’t afford to pay their priests,” he says.

Rowan Williams, the Archbishop of Canterbury, is poorly paid by chief executive standards, receiving a stipend of £67,790. Canon Houlding costs his parish in total about £52,000 a year he estimates. In retirement, priests have a pension of about £12,000 a year to look forward to. Final-salary pension schemes have been hit by falling investment markets and rapid increases in life expectancy. Clerical pensions accrued before 1998 are paid from a wider pool of church cash, while post1998 benefits come from a separate fund.

At the end of last year there was £482 million under management, about £125 million less than needed to keep retired priests out of penury.

Clergymen and women face having to work longer for smaller pensions. Next month the General Synod, the Church’s national assembly, will vote on increasing the number of years that must be worked for a full pension from 37 to 40, and to reduce annual increases in benefits. About 20 per cent of the Church’s funding comes from the Church Commissioners, who administer the Church’s historical assets such as commercial property, cash and bonds. Led by Andreas Whittam Smith, founding Editor of The Independent newspaper, they oversee a £5.3 billion portfolio, including about £1.4 billion worth of property and £3.3 billion of equities. The money raised by the commissioners is used to help poorer parishes, pay pre1998 pensions and cover the costs of bishops and cathedrals.

In the past ten years, the commissioners have sold plum property holdings including their headquarters at No 1 Millbank, which went to the House of Lords for £65 million two years ago. But they have retained prime sites including London’s Royal Lancaster Hotel. They also lend money at 4 per cent to retiring priests so they can buy a home. Any increase in the property’s value is split between the resident and the commissioners.

Last year the commissioners achieved a total return on assets of 13.6 per cent. Over ten years they have averaged 10.7 per cent, well above the average returned on similar portfolios of 8 per cent. Terry Smith, the chairman of Collins Stewart, the stockbroker, took a swipe at ethical investors last week, singling out churches, charities and the Cooperative Insurance Society. Andrew Brown, secretary to the Church Commissioners, is sensitive to suggestions that ethical investment restricts returns. Ethical restrictions had only 0.02 per cent negative effect on performance last year. Mr Brown says: “The chairman of our ethical advisory group was actively involved in discussions with British Airways during the religious symbol row and regularly talks to executives at the highest level”.

Mr Brown and Canon Houlding admit that times are hard for many churches, but both remain optimistic. Canon Houlding says: “It’s tight, it’s hard, but we have huge goodwill from the parish and there’s the spirit of generosity from the congregation. They want the church to succeed.”