USA determining "missing" interest

[dksinger]

I have been appointed to the finance committee for my church. The committee has been helping the newly elected treasurer cope with all the ins and outs of the position. In the process we have discovered that the pastor’s pension has been funded at 10% for some years rather than the 14% specified in his contract. We have calculated how much should have been going into the pension fund quarterly and intend to pay the difference to the fund.

The question has come up as to whether we also “owe” the pastor’s pension fund the interest (increase in value?) that was missed by underfunding the pension. I’m not sure that is a question that can be answered on this forum. However, if we do decide that we owe the missing interest, how would we calculate that amount??

 

[kirby]

Depends on what the pension fund is invested in. If the fund itself is in - say - an interest earning bank acct then yes I think the pastor has lost out on that and you owe him that interest. If it was a non-interest earning account then you owe nothing extra. If it was invested in stocks, then you can figure out the return the ACTUAL invested portfolio made over that period to get a yield and you owe that yield times the money that should have been invested there for that period of time.

Or you could none of the above and tell pastor that you are saving him/her from the "evils of filthy lucre".