SSS looking at overseas investments to help support payments

THE Social Security System (SSS) is looking to invest overseas in order to diversify its asset base and raise additional income to fund pension and benefit payments.

SSS President and Chief Executive Officer Emmanuel F. Dooc said the state-run pension firm is considering foreign investments, similar to steps taken by the Government Service Insurance System (GSIS).

“[A]lthough we are allowed to do foreign investments, right now we have not invested overseas. But based on the experience of GSIS where they reported good returns, we will also consider that,” Mr. Dooc told reporters last week.

“We don’t like to restrict our investments in one basket in the local economy, in domestic investment. So we will definitely study it. That is in our business plan.”

Last month, GSIS President and General Manager Jesus Clint O. Aranas bared plans to invest some $800 million in foreign currency-denominated instruments and hire two external asset managers.

Mr. Dooc said the SSS has likewise reached out to global investment advisers as it seeks to diversify assets.

Apart from salary contributions of workers and their employers, the SSS and GSIS rely on investments and other income to pay the monthly pensions and other benefit claims of its members.

Republic Act No. 8282, or the Philippine Social Security Act of 1997, allows the pension firm to invest portions of its reserve funds — currently worth some P490 billion — in government bonds and securities, shares of stocks, mutual funds and foreign currency deposits, among other financial instruments.

Its charter allows the SSS to allot up to 7.5% of its investible funds in offshore investments.

Amendments proposed by the SSS to Congress include allowing its Social Security Commission to “redistribute” investment ceilings set by the charter for each type of instrument.

Currently, the SSS maintains placements in government-issued debt papers, equities, corporate bonds, real estate, bank deposits and loans to members cumulatively worth P494.717 billion as of endOctober last year. This generated P28.908billion revenues for the pension firm, with an average rate of return at 7.2%, according to latest available data.

Additional income from these investments will help extend the life of the pension fund, which can so far last until 2032 after it paid out a P1,000 across-the-board increase in monthly pensions for retired private sector workers.

The SSS has submitted a request to President Rodrigo R. Duterte to increase the monthly contribution rate for employees to 14% from the current 11% starting April, alongside adjustments for the minimum and maximum salary credits.

If approved, this is estimated to generate around P45 billion from April-December alone, which will be enough to extend the SSS fund life until 2044.

Ideally, the pension fund should last 70 years.