The single most important economic story of the moment is inflation. Unfortunately, we know little about its long-term effects on Colorado’s public pensions, a situation that it unlikely to change in the near future.
First, the good news.
For public pensions around the country, the main immediate effect of inflation has been to boost their Cost of Living Adjustments (COLAs). Most pensions’ benefits are tied to inflation, and with prices rising, that means more money being paid out right now to beneficiaries. Those cash flows out also come at a time when markets are down. What’s more many pensions base their contributions on employees’ salaries, which have not increased yet to match rising prices.
See the full article by Joshua Sharf, July 24, 2022