Bang for your (borrowed) buck
New rules adopted by the Governmental Accounting Standards Board allow governments with troubled pensions to dramatically shrink their funding gap by borrowing. Hamden, Conn., issued $125 million in pension bonds but lowered its shortfall by about $320 million.
Governments that borrow money to fund their pensions often pay less into their pension funds in future years than they are supposed to. That can leave the funds in worse shape than they were when the debt was sold, even if the pensions earn more on the borrowed money than taxpayers owe in interest. See below how the top-20 biggest pension bonds since 1996 have fared.