P12.5-billion SSS fund in stimulus plan needs government guarantee

Published by rudy Date posted on February 3, 2009

MANILA, Philippines — The Social Security System (SSS), the state pension fund manager for private employees, said its planned P12.5-billion contribution to the government’s economic stimulus package would require full government guarantee.

SSS president and chief executive officer Romulo Neri said that aside from full government guarantee, the investment would also require a return commensurate to the risk and tenor of the fund’s contribution.

“This is a requirement mandated by the SSS charter,” he explained amid criticism from lawmakers.

Gabriela party-list Rep. Liza Maza was the first to call for an investigation into SSS’s plan to contribute P12.5 billion to the planned P100-billion infrastructure component of the P300-billion economic stimulus package of the government. Other lawmakers followed, with Sen. Aquilino Pimentel Jr. saying that the plan is illegal.

Neri explained that the stimulus package was intended to pump prime the Philippine economy as buffer against the effects of a global economic crisis, which can lead to thousands of Filipinos losing their jobs here and abroad.

The Philippine Chamber of Commerce and Industry, the proponent of the stimulus program, sought to split the P100-billion infrastructure funding between the government and the private sector.

The public sector’s P50-billion share would come from SSS, Government Service Insurance System, Land Bank and Development Bank of the Philippines at P12.5 billion each.

Neri urged critics to study the SSS charter, which specifies the manner and sets limits on the fund’s investments, and “to stop spreading speculations that only misinform and confuse the public.”

“It is unfortunate that some politicians are using the issue to gain media mileage at the expense of SSS members and stakeholders,” he said, lashing out at politicians who have been criticizing him.

The Social Security Act of 1997 allows SSS to invest up to 30 percent of its investment reserve fund on domestic infrastructure projects. It also provides guidelines to protect the fund.

Government economic managers said the P300-billion fund would be rolled out within the next two years to help the Philippines prepare for what happens after the crisis.

This way, the government would be able to come up with an efficient mechanism on how to go about utilizing the fund.

Economic managers said this mechanism should help ensure that there would be no room for corruption in the disbursement of the funds.

Neri said the agency has yet to draw up the scheme for its P12.5-billion contribution to the fund. Among the different projects proposed for private sector financing are the Pangasinan-Tarlac-La Union toll expressway, C6, Manila-Cavite Coastal road, the North-Metro Manila Skyway, Southern Luzon Expressway and the Southern Luzon Artillery Road.

Meantime, Malacañang will work on increasing benefits for members of public pension funds and health insurance and the Pag-IBIG housing fund to help them cope with the current financial difficulties and boost the Arroyo administration’s efforts to jump-start the economy.

Socioeconomic Planning Secretary Ralph Recto explained the government’s pump priming program to insulate the country from the global economic crisis has two components, namely, fiscal stimulus and monetary easing.

The fiscal stimulus plan is comprised mainly of the Palace’s more than P300-billion Economic Resiliency Program that would be allocated for infrastructure and social safety nets.

He pointed out that the Social Security System (SSS), the Government Service Insurance System (GSIS), PhilHealth, and Pag-IBIG have huge “investible funds” or retained earnings from the difference in the members’ contributions and the claims and benefits of members.

He said GSIS has an asset base of more than P400 billion, the SSS has P230 billion, Pag-IBIG has about P29 billion, while PhilHealth has approximately P85 billion in assets for a combined total of over P700 billion.

“Is it possible that the difference for the next 12 to 18 months, for example, for PhilHealth at least to improve the average benefit that a PhilHealth member when one gets sick, which is roughly P7,500, by 20 percent or to P9,000 on the average. That would be good for PhilHealth members,” Recto said in a briefing at the Palace. — Iris Gonzales with Paolo Romero, Philippine Star

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