Formula to calculate missed appreciation

w00519772

My employer made a mistake and agreed to backdate my pension contributions for about eighteen months.

I have spoken again to the Pensions Advisory Group and the Pensions Ombudsman and I was informed that I should receive a payment for lost capital growth. I have calculated the capital growth as follows:

Fund price in month 1: [FONT=&quot]117.586857
Fund price in month 18: [/FONT][FONT=&quot]134.054910
Missed employer [FONT=&quot]contributions (total)[/FONT]: 2701.08
Calculation: ([/FONT][FONT=&quot](134.054910-117.586857)/ 117.586857)*100=14%

How would I add the 14% to the contribution i.e. [/FONT]
[FONT=&quot][FONT=&quot]2701.08?

I guess it would not be: (114/100)*[/FONT][/FONT][FONT=&quot]2701.08=3,079.23

I believe the formula above is invalid because it would mean that the most recent contribution has grown by 14%.

What is the formula?
[/FONT]

kangoora

I don't think it's that simple - I think you are right that only your earliest missed payment would have missed out on 14% growth, for example, with the stock market over the last few months they could be in negative territory for recent payments.

My assumption is you would have to calculate the increase on each months contribution, so difference between date on pension purchases and the end of the 18 month period i.e.

Month 1 14% increase
Month 2 12% increase
....
....
....
Month 17 -3% (negative)
Month 18 -1% (negative)

It's going to be awkward........

bigadaj

Would have thought its up to the employer to prOpose.

Simple method may be 7% as half of the growth, but thats not very accurate, correct solution probably as kangoora suggests.