As mentioned earlier this week in a previous blog post, Norwich, CT sought support from town residents to approve a $145 million Pension Obligation Bond (POB). I’m happy to report that the community supported this initiative. Now the challenging part begins. How will they invest the proceeds? Will they inject the new contribution into the existing asset allocation and subject those funds to the whims of the markets or will they try to secure the promised benefits by defeasing the Retired Lives liability as far out as the allocation permits? As a reminder, we believe that the primary objective in managing a defined benefit plan is to SECURE the benefits at a low cost and with prudent risk. Defeasing the plan’s liabilities accomplishes this objective! It will be interesting to watch this story unfold. This one and the other 90+ municipalities that have issued >$10 billion in pension debt in 2021.