• Some state and local governments issued pension obligation bonds (POBs) to pay their required pension contributions. POBs are debt securities used to pay unfunded accrued actuarial liabilities in a public pension planSince 1986, state and local governments have issued around $105 billion in pension obligation bonds. The bulk of POB activity has centered in 10 states, including Illinois and California.

  • While there are only a few winners and a much larger pool of losers under current pension systems, a smooth accrual model would allow more teachers to gain secure, retirement benefits from the onset of their careers.
  • Providing Social Security for all public workers would resolve equity issues and gaps in coverage while representing a modest increase in costs for state employers.
  • Despite strong recent stock market returns and states paying an increased share in annual required contributions, pension funding ratios for state and local plans stayed flat. As states begin using a new accounting standard to measure assets and liabilities, funding ratios are likely to decline.
  • Policy changes in Washington State suggest teacher pensions can be reformed in a way that is attractive to both teachers and states.