Unlike the dapper movie character James Bond, the pension bond is seen as a doubtful solution to our unfunded liabilities. An obscure topic in West Virginia has grown to be the debate of radio, TV and print news, as well as commercials and public service announcements, yet it is as confusing as ever.

The subject is cumbersome and detailed. Oversimplification obfuscates more than it enlightens, but explaining the bond in all its glory makes for a boring article indeed.

First, a little pre-bond history. There are two ideas of thought around funding the state pensions. The Arch Moore philosophy is keep enough in the bank to cover those that are retiring today, while other minds believe that there should be enough funds to take care of every individual if they all retired at once. While I agree with Arch Moore, it does not matter much: the State Supreme Court ruled that all the money to cover everyone should sit in an account somewhere. Since the inception of the pensions, the leadership has only covered today’s retirees. The Court’s ruling imposes a deficit in the judges, teacher’s and state trooper’s retirement fund that the state has to make up somehow.

Enter the pension bond. The Governor proposes the state sell $5.5 billion (USD) worth of bonds to pay the debt and explains it this way:

“Passage of the proposed Pension Bond Amendment would allow the State to establish a fixed 30-year payment of approximately $350 million each year to pay off these retirement debts. The State would accomplish this by selling up to $5.5 billion in bonds, with the money from the sale of the bonds being placed in consolidated retirement trust funds, which will then be invested in stocks and bonds for up to 30 years.

“In return, the state would make a fixed payment of approximately $350 million a year for 30 years to repay the buyers of the bonds.”

It is a complicated issue with many compelling arguments for and against. Here is what I have heard from Senators, Delegates, the Governor, laypeople and the media:

1. Vote for because it is a savings of $1.5 billion over 30 years
In the status quo, the payments will gradually increase until it maxes out at $724 million in 2034. By paying a fixed $350 million for 30 years, the saving is estimated to be $1.5 billion. This is a best case scenario figure.

2. Vote for the bond because Manchin was elected by a vast majority and his plan deserves a chance
I did not vote for Joe Manchin and feel no obligation to roll over dead just because he was elected.

3. Vote for the bond because if you don’t, Manchin will use its failure as an excuse to raise taxes

4. Vote against the bond because the return on the investments has to be 7.5% for the plan to work
7.5% is a high number to attempt to reach. When you factor that West Virginia’s average return in their investments is 4%, their projected figure looks near impossible.

5. Vote against the bond because it involves a significant risk in the stock market
No matter how much you look at trends and statistics, stock can go down very quickly. Just ask Lucent Technologies.

6. Vote against the bond because government cannot be trusted to keep their hands of the money

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After reviewing both sides, I will vote against the bond because I do not trust an undisciplined, Democrat controlled government and I do not believe the stock market can return anything close to a 7.5% yield.

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Update: According to a source I trust, the stock market has never averaged less than 7.5% in any given 30 year span. He is confident we can get our return.