The state-run pension fund for private-sector workers will invest overseas for the first time and buy more local stocks to boost returns after President Duterte delivered on a campaign pledge to increase pensions.
The P500-billion ($9.6-billion) Social Security System (SSS) may invest as much as P37.5 billion abroad, the fund’s President Emmanuel F. Dooc said in an interview. SSS, which covers 36 million workers, may also buy up to P35 billion more of Philippine stocks, adding to a P100-billion equities portfolio that is overweight utilities, he added.
“We want better returns,” Dooc said. “We also don’t want to put all our eggs in one market.”
The Philippines joins a global trend of pension funds struggling to meet their commitments as longevity increases and investment returns dwindle—which the World Economic Forum last June said will lead to a $400-trillion shortfall in retirement savings globally.
Duterte’s boost to pensions will cause SSS to run out of money by 2032, 10 years sooner than forecast, while a proposal to nearly double maternity leave entitlements could add a further P5 billion to the fund’s annual payments, Dooc said.
Dooc added that while he supports Duterte’s initiatives, “it has to be done in such a way that it will not deplete the fund.” He said he hopes lawmakers will this year amend the fund’s charter to give it greater independence in making decisions, including raising member contributions.
The SSS also needs more flexibility in investing, he noted. Currently, it can hold 40 percent of funds in Philippine government bonds, 30 percent in local stocks and 10 percent in loans to members. It is authorized to invest 7.5 percent overseas, but hasn’t previously done so.
Dooc also wants to offer more member-loans, but is near the ceiling. About 23 percent of the fund is invested in stocks, giving room to buy more equities.
The fund generated a 6.7-percent return last year, and placing some of its portfolio overseas will hopefully reap higher yields, he said. The benchmark Philippine stock index has fallen 1.2 percent this year after rising 25 percent in 2017.
The SSS also plans to hire as many as eight domestic fund managers to each manage P1 billion of stocks, fixed income or a mix of both, Dooc said.
1 comment
Dyan mababangkarote ang SSS pag pinasukan ng mga mga unqualified at overpaid board members samahan pa ng fund managers nagagawing gatasan.