Pension Obligation Bonds: Financial Crisis Exposes Risks
January 19, 2010
The brief’s key findings are:
- Some state and local governments issue Pension Obligation Bonds (POBs) to raise cash to cover their required pension contributions.
- POBs allow governments to avoid increasing taxes in bad times and could reduce pension costs, but they pose considerable risks.
- Those who issue POBs are often fiscally stressed and not well-positioned to handle the investment risk.
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Citation
Munnell, Alicia H., Ashby Monk, Jean-Pierre Aubry, and Thad Calabrese. 2010. "Pension Obligation Bonds: Financial Crisis Exposes Risks" Issue in Brief 9. Chestnut Hill, MA: Center for Retirement Research at Boston College.
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