Kurt Winkelmann interviewed by Fund Fire on pension bonds
Senior Fellow Kurt Winkelmann was interviewed for an April 9 column in Fund Fire, titled Sales of Pension Bonds Rose in 2020 to Highest Level Since Crisis.
Reporter Bridget Hickey highlighted challenges facing state and local governments as financial impacts of COVID-19 threaten pension funds. "State and local governments raised more money from pension obligation bonds last year than they have for more than a decade, as finance departments grappled with the economic effects of the coronavirus pandemic," the article starts.
Hickey focuses on pension obligation bonds (or POBs), a tool many govenment entities utilize to raise money. However, many financial experts are concerned the risks simply do not pay off in the long run.
Another risk is that POBs mask poor fiscal behavior, says Kurt Winkelmann, a senior fellow at the University of Minnesota and co-author of a policy brief titled ‘Pension Obligation Bonds are a Bad Idea.’
"These pension funds are underfunded for a reason... there’s no guarantee once you do a pension obligation bond that the same behaviors that got you into trouble in the first place won’t simply repeat themselves," he says.
Read the full policy brief, Pension Obligation Bonds are a Bad Idea.
