Sunday, June 4, 2017

How do we pay for COLA using energy taxes?

A long standing criticism of public sector defined benefit pension plans is that, unlike their private sector counterparts, public plans typically provide for inflation related adjustments to retiree benefits (commonly called COLAs). The common assertion is that since there is a difference between the public and private sector in this regard, the public sector must be wrong. If you are among the naysayers, the following may not change your mind about who is getting it right but, at least, it should help you become a better informed critic.
Cannot be done, Jerry Brown you numbskull.  Energy prices feed general inflation, so your California plastic colored government is going to chase prices to the pit, you will crash, bonehead. 

COLA adjustments will be the cause of a coordination failure as we adopt sandbox, as the pending crash caused by COLAs and energy taxes are very soon priced around the loop.  We will calculate Jerry's crash point, no need to read this blog.

Here is a simple adjustment, subtract 1.5% from the expected rate of return.  Then crash and burn because you are soon going to be hedged on this..

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