Pension Obligation Bonds (POBs) do NOT reduce pension obligations. They increase pension assets, which produces an accounting benefit (more assets — the same liabilities = a lower unfunded liability).
Economically, a POB is just a “carry trade,” which is a borrowing at a low rate to bet on hopefully-higher-yielding products. Not surprisingly, Wall Street also sells those products (e.g., stocks, private equity. hedge funds, etc.).
When the smoke clears after issuance of a POB, the issuer has (i) the same pension obligations it had before, (ii) more debt, (iii) paid fees to bankers, and (iv) gambled the proceeds on products that beget more fees for bankers.
POBs are meritless products deliberately misnamed by bankers in search of fees. Just say no.