The state-run pension fund Social Security System (SSS) may finally push through with its planned offshore investments next year once it’s no longer pressured to disburse more benefits to members and pensioners badly hit by the COVID-19 pandemic.
“Right now, we are trying to study the environment. Definitely, we’re looking at global bonds, global equities, and we’re talking to foreign fund managers,” SSS executive vice president for investments Rizaldy Capulong told a press briefing on Friday.
Under Republic Act (RA) No. 11199 or the Social Security Act of 2018, the SSS can invest up to 15 percent of its Investment Reserve Fund in foreign currency deposits or investment-grade rated foreign currency-denominated debts, prime and non-speculative equities. Prior to RA 11199, which amended the SSS’s charter in 2019, the foreign investment cap was at 7.5 percent of the fund.
The SSS can also invest in other Bangko Sentral ng Pilipinas (BSP)-approved financial instruments or other assets issued overseas.
RA 11199 mandates that the SSS’s investments in foreign instruments or assets must be listed on the bourses of the respective countries where they were issued. The issuing companies must also be profitable during the past three years and must have paid dividends at least once during that period.
SSS estimates show P75 billion could have been allocated had the pandemic not happened. Capulong said the crisis stopped the implementation of the SSS’s five-year foreign investment plan, which began in 2019.
“We needed to prioritize the needs of our members and pensioners. Since COVID-19 struck us, we have been prioritizing giving out member loans as well as pension loans over securities investments,” Capulong said.
“But … we are already actually seeing lower disbursements for loans this year than last year, so that will help [us set aside] more funds so we could start investments abroad by next year,” he added.
Capulong said the mandatory coverage of overseas Filipino workers (OFWs) under RA 11199 entailed the SSS to be ready to invest offshore these additional contributions remitted from abroad.
From January up to the first week of September, the SSS collected about P159 billion in members’ contributions, bigger than the P139 billion in benefits it disbursed during the same period, Capulong said.
Including gains from its domestic investments, the SSS’s year-to-date revenues reached P192 billion as of last week, while its total expenses amounted to a lower P163 billion, Capulong added.
Despite the prolonged pandemic which shed millions of jobs and shuttered thousands of businesses, the SSS had pushed through with the scheduled increase in members’ monthly contribution rate to 13 percent this year from 12 percent previously.