THE state-run Social Security System (SSS) is looking at increasing its placements on the capital markets to generate more funds and cover the recently approved P1,000 increase in the monthly pension of beneficiaries.
During the SharePHIL general membership meeting on Thursday, SSS President and CEO Emmanuel Dooc said the plan is to have 25 percent ownership in toll roads and real estate companies.
Apart from the latest pension increase, the SSS has been tasked to raise the monthly pension by another P1,000 no later than 2019.
“We will also cut down expenses, limit promotions, filling up only the substantial positions to generate more investment income and provide for the pension increase while not compromising other benefits,” Dooc said.
“If our intervention measures will have positive results – like the collection efficiency, getting better investment returns – we can generate more funds, he added.
Pensioners who made contributions to the funds for 10 years are entitled to a monthly pension of P1,200 to P3,200 monthly, depending on the amount of their monthly premiums. Those who made contributions for at least 20 years are entitled to P2,400 to P4,000 a month.
In terms of equity investment, Dooc said the SSS has been investing in “top firms of all the six sectors” of the Philippine Stock Exchange, noting these are the companies that are “matured and profitable.”
According to the SSS Charter, 30 percent of the investment reserve fund (IRF) must be invested in equities. Dooc said the fund has so far invested “close to 30 percent” of the IRF since last year.
But the share of equity placements will depend on the performance of the stock market, Dooc noted, saying the funds may be used in “other unconventional investments” including hedge funds, managed futures, real estate, commodities and derivatives.
To generate more funds, the SSS is also looking investing in overseas assets such as stocks and bonds.
Foreign and local fund manager have approached the SSS offering expertise.
“We will look into it. We want diversification,” Dooc said, noting that the fund has not invested in foreign markets in recent years.
“The requirement for overseas investment is 7.5 percent of our IRF. We have more or less 480. We definitely need an investment advisor,” he added.
Dooc said the fund is targeting P180 billion in total contributions for 2017, compared with P140 billion in 2016.
The fund has a current life span of 25 years to 2042, higher than the fund life of up to 2033 in the United States.