WASHINGTON — One of the biggest investor concerns about unfunded public pension liabilities is whether a government's payment obligations to retirees will compete with debt repayment, according to a Wells Fargo report issued Wednesday.

This concern is playing out in Stockton and San Bernardino, Calif., where each city recently filed for bankruptcy and decided to default on their pension obligation bonds. The POBs are insured so bondholders will continue to be paid.

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