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House Co-Sponsorship Memoranda
House of Representatives
Session of 2021 - 2022
Regular Session
MEMORANDUM
| Posted: | May 13, 2022 03:46 PM |
|---|---|
| From: | Representative Mike Jones |
| To: | All House members |
| Subject: | State Workers' Insurance Fund (SWIF) Legislation |
| In the near future, I plan to introduce legislation to expand the investment authority of the State Workers’ Insurance Fund (SWIF). My legislation would permit SWIF to invest up to 20% of the book value of its assets in equities, subject to the prudent investor rule. This simple, common-sense amendment to the Workers’ Compensation Act would allow SWIF the flexibility to adjust its investment portfolio to changing market conditions and would aid SWIF in ensuring its financial solvency for years to come. Currently, SWIF’s investment authority in equities is restricted to 7.5% of the book value of SWIF’s assets. This limit is a result of a combination of provisions in the Workers’ Compensation Act, the Banking Code and the Fiscal Code. These restrictions limit SWIF’s ability to manage a portfolio that responsibly maximizes return on investment, while ensuring the security of SWIF’s assets. Currently over 93% of SWIF’s assets must be invested in fixed-income securities. In current market conditions, these fixed-income securities are earning historically low rates. Rates that don’t begin to keep pace with inflation. No such restrictions on investment authority are placed upon any insurance carrier in Pennsylvania. Further, SWIF has no commonality with the banking industry; therefore, there is no logical reason to tie its investment authority to investments authorized for savings banks. SWIF is not a savings bank. Likewise, SWIF is not a conventional insurance carrier; it is an enterprise fund of the Commonwealth, a statutorily created entity that is not licensed or regulated as a traditional insurer. Although some provisions of the Banking Code are incorporated in my legislation, for example, a prohibition on foreign investments and adherence to the Prudent Investor Rule, it is important to consolidate SWIF’s investment authority in one statutory provision that addresses the unique needs of SWIF and recognizes the unique purpose of SWIF. Rather than spread SWIF’s investment authority between the Workers’ Compensation Act, the Fiscal Code and the Banking Code, my legislation provides for one SWIF-specific section in the Workers’ Compensation Act that comprehensively addresses SWIF’s authority to invest its assets, including investments in equities. There is widespread support for this change. The State Workers’ Insurance Board, the SWIF Advisory Board and the Workers’ Compensation Advisory Council - groups representing diverse interests and comprised of individuals with experience in workers’ compensation and the insurance industry - support the expansion of SWIF’s investment authority. Please join me in cosponsoring this important piece of legislation. |
Memo Updated: May 13, 2022 03:47 PM