The single factor that gives indexing an advantage over active management is the size of the operating expense headwind.

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With personal accounts, such price-indexing was completely unnecessary, as workers over time would be replacing the promised wage-indexed benefits, which Social Security admittedly cannot finance, with the fully funded personal account benefits financed by real savings and investment.

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The formula used in indexing showed 3.8% of inflation this year over last, well above the 1.4% amount used last year, and far greater than the 0.18% inflation factor used to set 2010 amounts, according to CCH.

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