Tom Curtis and Rich DeColibus re: COLA

From Rich DeColibus, July 21, 2009
Subject: Re: COLA

Hi Tom,

Well, a COLA that isn't compounded isn't a COLA. It's simple, the CPI has a number of versions, but they're all compounded because inflation is compound by definition. What STRS calls a COLA isn't one. It's a basically fixed amount (0-3% of your pension at the moment you retired). It's an income supplement (not a COLA) impacted by the rate of inflation. However, since your base pension DOESN'T go up (ever...the FAS is really "final"), if the rate of inflation is anything above 0%, you're losing ground every year except the first year you retire. The longer you live, the farther behind you get. The only way to stay economically viable is if there's significant deflation (things get cheaper), not much of a realistic scenario unless there's a worldwide depression.

STRS needs to standardize its terminology in line with the rest of the world. There's no such thing as a COLA that isn't compounded.

Rich

From Tom Curtis, July 20, 2009

Hello Rich,

Active CORE members started questioning the issue of the lack of a compounded COLA back in 2004, but never received any consideration from management or the board. Bob Jones, a retiree from Akron, has consistently sent out emails complaining about this ever since. He has made presentations to the board concerning this issue as well. I have written Nehf and asked if OPERS' COLA is compounded, but he is on vacation and should have returned this week. I am pretty sure there COLA is compounded. Yes, it is better then nothing, but again, it was not meant to keep up with inflation. Who is really looking out for our interests?

Rich, so many issues have been taken to management and the board that have never seen the light of day. Most of our board members are there for the glory and have not a clue about their true fiduciary responsibility to the membership. That is very sad!

In my opinion, the OEA leadership has used the STRS board seats as a carrot for their executive committee members. You show leadership and work hard for us and maybe you will get a seat on the STRS board. They could buy every seat and they have, then filled them with brain washed self absorbed people.

The two OFT elected board members, Jeff Chapman and Mary Ann Quilter-Cervantes were complete failures, in my opinion. Both of them rarely backed anything Dennis brought to the table. They were offended by Dennis' aggression. What a load of crap! I would like to know what they feel they brought to the board during there tenure, for I know of little. They both took advantage of traveling to seminars that supposedly would make them more knowledgeable trustees. Oh Boy!

Tom

From Rich DeColibus, July 20, 2009
Subject: Re: COLA

Hi Tom,

I never imagined the COLA wasn't accumulative. That renders it almost useless (better than nothing, I guess, but it'll never keep pace with inflation...it is unbelievable to me it's not compounded).

From Tom Curtis, July 20, 2009

Hello Rich,

I would imagine by now others have already written you, but the only figure correct on your chart is the first one. That $1200 amount continues to be added each year, not the compounded amounts you have listed. After 20 years the total would be $64,000, for this scenario.

Tom

Click here to view Rich's July 10 letter/post to STRS Board and COLA chart.