STATE-run Social Security System (SSS) said it has tapped the Land Bank of the Philippines (LandBank) and Development Bank of the Philippines (DBP) as its local fund managers to boost its income in the next three years.
The state pension fund for private employees said the LandBank Trust Banking Group and the DBP Trust Banking Group would be the ones to manage its P2 billion worth of investible funds for pure fixed income.
SSS President and Chief Executive Officer Rolando L. Macasaet said that each unit of the state-owned banks had already received P1 billion in two tranches last October 13 and 17.
Macasaet explaiend that the LBP-TBG and DBP-TBG will manage the SSS’s funds “within specific risk parameters” for three years to expand the pension fund’s investment portfolio and generate more earnings.
“We see that SSS will greatly benefit from tapping external fund managers to manage a portion of our investible funds. We can take advantage of their expertise to help grow the SSS funds and diversify the investment portfolio,” Macasaet was quoted in a statement the SSS issued last Thursday.
The SSS said the TBGs of LBP and the DBP will complement the other fund managers it hired to manage Pure Fixed Income investibles.
Earlier this year, the SSS tapped the Bank of the Philippine Islands (BPI) Asset Management and Trust Corp. and the Security Bank Corp.-Trust and Asset Management to handle P2 billion funds allocated for pure fixed income investments.
Citing the Social Security Act of 2018, SSS Executive Vice President for Investments Sector Rizaldy T. Capulong explained that the state pension fund can appoint local or foreign fund managers to handle its Investment Reserve Fund (IRF).
The IRF is a portion of the SSS Reserve Fund allocated for investments wherein income derived from it goes back to the reserve fund and helps it grow, according to the SSS.
The SSS has been hiring qualified local fund managers since 2016.
“Tapping more investment savvy fund managers is a best practice worldwide, particularly with pension funds. This strategy allows pension funds like SSS to access the expertise of fund managers in frontier markets where they do not have a competitive advantage like foreign investments,” SSS Senior Vice President for Fund Management Group Ernesto D. Francisco Jr. said.
To date, SSS said it has already awarded the management of seven segregated investment mandates for pure fixed income fund, balanced fund, and pure equity fund worth P8 billion to five local fund managers.