Pension expenses for state and local governments will rise sharply...

Pension expenses for state and local governments will rise sharply over the next several years, helping to spur ratings downgrades of the debt they issue, unless stock markets sustain a 1990s-style boom, according to a new Fitch Ratings report. "Reversal of Fortune: The Rising Costs of Public Sector Pensions and Other Post-Employment Benefits" looks at the credit considerations pertaining to pension liabilities and praises the role pension obligation bonds can play for public funds - while also warning of their pitfalls. "A failure to follow balanced and prudent investment practices with respect to pension obligation bond proceeds could expose the sponsor to market losses," said Joseph Mason, director.