Reading 15 EOC 3 and 4

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I don’t understand why in the question #3 the Retirees amount of 10 M$ is used while in the question #4, the Deferreds and the Active Accrued amounts are used ?
Thanks for the prompt answer.
 
I assume you are referring to question 2 and 3 ?
Question 2 is focused on mimicking using real rate bonds:
Note the text reads that company pays COLA adjustment to retirees based on CPI inflation and company will limit this benefit to only those retired from next year. So you need to hedge the full retirees portfolio of $10mm + half of future wage inflation (6 x 0.5) = 3.
Question 3 was more challanging for me:
Now you can see from above that payments to retirees are completely hedged and half of future wage inflation.
You are left with active accrued 9, deferred 5, half of future wage inflation 3 and half of real wage growth 1 = 18. The remaining half of real wage growth should be hedged through equities.
 
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