Pension is decreasing by 3/3% a year????


I entered Pension amounts, and on the Non-Asset Income report it shows the Pension is decreasing by 3.3% a year. When I entered the pension amount, I entered a 2% inflation. So why is the report showing a 3.3% decrease each year? This happened with both my pension and my husband's.


dan royer's picture

I think it's just a misunderstanding of how the index to inflation works when you entered the pension. If you choose 2% that means that it's only indexed at 2% of fully indexed (100%). So in assumptions I assume you have it set to the default 3% inflation. OK, then if you set the index at 100% you'll see the the pension amount hold steady in today's dollars because it's fully indexed (100%). If you change your assumption about inflation in Assumptions to 4%, then it would still hold up since it's 100% indexed to inflation.

It sounds like you want it to be about 2/3rds indexed to inflation--that would be 66%. If you didn't want the pension to get any cost of living adjustment at all (like many pensions such as my wife's) then you'd set it at 0% indexed.

That's the way it works. In other words, you don't have a separate inflation adjustment for the pension. You set it relative (0%--100%) to where you have inflation set in your main Assumptions area.

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