Re(2): COLA | Boards2Go

Re(2): COLA
IP: 108.9.106.65
Posted on December 2, 2010 at 04:35:59 PM by Jeffrey L Smith

Roy,

I prepared a spread sheet based on how I interpreted the language in the pension contract:

(d) The "average cost-of-living index" shall be ascertained each year; determined as the average of the immediately preceding 24 monthly consumer price index figures, relative to the United States as a whole, known as The Consumer Price Index for All Urban Consumers (CPI-U), (1982-84 = 100 Basis), most recently issued as of such date by the Bureau of Labor Statistics. Should the base point or basis of the monthly Consumer Price Index be revised by the Bureau of Labor Statistics, this term shall mean the published average as adjusted by the Board of Trustees with advice from the Actuary so as to maintain consistency in index figures for purposes of this Plan.

The spread sheet calculates the cola using the same formula you used. I came up with a difference of 3.60125 % increase in cost of living this year. My cola increase last year was 2%, but when I run the numbers in the spread sheet for last years cola using the same formula the sum is negative -0.69492. I am not sure the methodology used is correct. The language in the pension contract is a little confusing particularly the following statement: the published average as adjusted by the Board of Trustees with advice from the Actuary so as to maintain consistency in index figures for purposes of this Plan. Does this mean that the board can deviate from the formula and arbitrarily change the cola based on the recommendation of the actuary?

I would be happy to send you a copy of the spread sheet for your review and input if you provide me with your email.

Replies:

Re(3): COLA - By RoyHall December 4, 2010 at 00:22:01 AM
Re(2): COLA - By Jeffrey L Smith December 2, 2010 at 00:23:02 AM
Re(1): COLA - By Paul Hoffman November 20, 2010 at 01:13:26 PM
Re(2): COLA - By arturo pedrero November 20, 2010 at 01:26:40 PM
Re(3): COLA - By Jeffrey L Smith November 20, 2010 at 07:21:17 PM
Re(3): COLA - By Paul Hoffman November 20, 2010 at 05:03:53 PM

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