Investments and Pensions

1. Investments and Pensions Third class MSCM 8615

2. Investments and Pensions • When you look at a church’s financial statements, two of the biggest numbers (usually) are the investment account and the pension account • Thus, I believe it will be helpful to look at these two accounts a bit more closely • We will use the financial statements of the Dioceses of Boston (pension) and Los Angeles (investments) as an overall guide

3. Investments • For our purposes, most of Chapter 4 boils down to the example on pages 89-90 • What this means is that for all of our examples, we will just go by the principle that all investments are carried at their “fair value” • In fact, you only need to be familiar with the material from pages 83 to the top half of 96 • I wanted you to read the entire chapter so that you could see that there are some complexities involved in accounting for investments, but they are beyond the scope of this course, but I do want you to understand the basics • Let’s look at Los Angeles and then an example

4. Pensions • You should be familiar with the terminology of the components of pension expense • Service cost • Interest cost • Actual returnon plan assets • Amortization of prior service costs • Gains/losses • Difference between actual return and expected return on plan assets • Amortization of gain or loss from prior periods, if significant

5. Pensions, cont’d • Let’s look at Boston • Let’s go through an example