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The budget director says, In my dreams, I take an aggressive line with the union and I win the battles. The cost of living adjustment
The budget director says, In my dreams, I take an aggressive line with the union and I win the battles. The cost of living adjustment is reduced to 1 percent. The productivity factor doubles to 1 percent. The employee contribution rate is increased to 10 percent. The salary give-back is $4,000, and the stock market comes back, so we earn 10 percent on our money. That is the aggressive case. How good would things be? Surely the ratio gets to 80 percent then!
INPUTS | Value |
Cost of Living Adjustment | 0.01 |
Long Term Rate of Return | 0.10 |
Productivity Factor | 0.01 |
Employee Contribution Rate | 0.10 |
Final Salary Give Back | $ 4,000 |
State Contribution Factor | 2.5 |
SUMMARY OF KEY RESULTS | Value |
NPV of Unfunded Liability | $ 13,346,833,337 |
Ratio of Assets to Liability NPV | 76% |
How would you explain this aggressive case scenario? What do this mean?
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