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Panel OKs amendment to let closed local retiree trusts buy investment-grade U.S. corporate debt
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Summary
The Senate Finance subcommittee amended and gave a favorable report to S420, which would allow certain closed local retiree pension and OPEB trusts to invest in investment‑grade U.S. corporate debt (rated by two national firms). Supporters said the change broadens conservative options for legacy plans; the bill moves to the full committee.
The Senate Finance Subcommittee on Tuesday amended and voted to send S420 to the full committee after approving a narrower definition of eligible corporate debt.
Sponsor Senator Young told the subcommittee the bill would allow qualified retiree post‑employment benefit trusts for closed local plans to add certain U.S. corporate notes, bonds and debentures to their permitted investments. "This bill would allow the retirement system for the city of Aiken to invest in corporate bonds," she said, describing the change as a way for legacy plans to broaden their portfolios while remaining subject to constitutional limits on equities.
City Manager Stuart Biedenbaugh, who testified for the City of Aiken, said the city's legacy pension closed June 30, 2018, covers roughly 300 beneficiaries and currently meets its obligations. Asked about returns, he told the committee the legacy plan has returned "about 4%" in recent periods and said it was not unusually harmed by a recent combined fixed‑income and equity downturn.
Webster Hall of the Municipal Association of South Carolina said the association supports S420 because it gives political subdivisions an option to invest certain post‑employment benefits in specified corporate bonds; Naomi Reid was introduced as the association's retiree health‑care expert.
The chair circulated a committee amendment to clarify eligible instruments and limit purchases to investment‑grade debt (roughly BBB and above) as rated by at least two national credit rating organizations. The committee adopted that amendment by voice vote and then approved a motion for a favorable report on S420 as amended, moving the bill to the full committee.
The bill's effective date is upon approval by the governor. The subcommittee did not record individual roll‑call votes in the transcript; decisions were taken by voice vote.
