The Social Security System (SSS) is actively looking for a fund manager to handle that portion of its portfolio that could be invested abroad, its president and CEO said last Friday.
Emmanuel F. Dooc, SSS president and CEO, said there is an ongoing endeavor to hire a foreign fund manager and that there are active negotiations at the moment to try and find a perfect fit.
Dooc said the state-run pension fund looks to diversify its investment portfolio and that management has not had an investment overseas, although its charter allows for overseas investing.
“That’s why we also got in touch with some investments advisers from abroad, and for diversification purposes. We don’t like to restrict our investments in one basket in the local economy, so we will definitely study it,” Dooc told financial reporters.
A year ago, the SSS said the same thing.
Under the SSS Charter, the pension fund is allowed to invest 7.5 percent of its portfolio in overseas markets. The SSS has around P490 billion in investments from which it earns an average return of 7 percent.
“What we need is expert advice. We have to get fund managers that are well-versed in international or foreign investments,” he said.
The erstwhile top dog at the Insurance Commission bared the proposed foray in the global investment market in the wake of a presidential mandate to increase the pension benefits of SSS member, a mandate that caught the fancy of most everyone that has worked in the private sector but entails reworking investment activities of the fund given the costs involved.
The hike in pension benefits shortens the so-called actuarial life of the fund and, thus, the need for management to optimize their investment activities in addition to making sure that the contribution of members are similarly adjusted.
According to Dooc, the Government Service Insurance System (GSIS), that services the pension benefits of government workers has trillions of pesos in its reserve fund that allows its to address the benefits of its members without adversely affecting its actuarial life.
“We would like also to do the same thing. Right now, although we are allowed to do foreign investments, we have not invested overseas. But, based on the experience of GSIS, which reported good returns, we will also consider that,” he said.
He also said the proposed SSS charter amendment allows the Social Security Commission (SSC) to adjust investment ceiling as they see fit going forward. The proposed SSS charter amendments are at the Senate committee level at the moment.
“The amendment will empower us to recast or redistribute the ceilings. So we can say, set aside a bigger percentage depending on the SSC,” Dooc said.
In January the GSIS bared a plan to invest some $800 million of its investment portfolio to take advantage of prevailing conditions in the various markets overseas.
GSIS President and General Manager Jesus Clint O. Aranas said the ideal rate of return they look forward to is 9 percent. The average rate of return for such placements at the moment is only 5 percent more or less.
The GSIS is also actively looking for at least two external fund managers to help them deploy the $800 million.
“We currently don’t have overseas fund managers,” GSIS Senior Vice President Gracita Gilda V. Bocanegra said.