SSS wants restrictions on investments relaxed

By Prinz Magtulis (The Philippine Star), January 6, 2017

MANILA, Philippines – The Social Security System (SSS) wants a relaxation of investment restrictions to raise more funding for the agency amid a clamor for a pension hike.

“It is so we can redirect our funds to better yielding assets,” SSS president and chief executive officer Emmanuel Dooc told reporters last Wednesday.

“This is to achieve what we have stated of making the pension fund as an economic tool for economic activity,” he said in a briefing.

Topping the list is a plan to deploy up to a fifth of its investment funds offshore. Currently, the SSS is allowed by law to put up to 7.5 percent of its money aboard, although no placements had been made.

The plan, included in charter amendments to be submitted to Congress, is to “gradually” increase foreign exposure by 2.5 percent every year until reaching 20 percent.

Aside from this, Dooc said cap on placements on private securities is also targeted to be lifted to 60 from 40 percent with options ranging from real estate investment trusts and feeder funds.

Equities limits will also be raised to 40 from 30 percent, while those for member loans will be hiked to 20 from 10 percent.

Other investment grade assets – not only the top rating AAA – are also planned to be considered.

“We feel that there is greater and better opportunities to get better income. We are positioning ourselves,” he said.

“We realized unpalatable to rely only on increase in contribution whenever there is clamor for pension hike. It’s very unpalatable,” Dooc said.

SSS is under public pressure now to fulfill President Duterte’s promise to raise by P2,000 the pension of more than two million retirees.

Dooc had reiterated members’ contribution rate would need to be adjusted to 17 from 11 percent to fund the hike. In the long-term however, he said this should not be the case.

“We also do not want that every time there is a clamor for a higher pension, our answer will be to add contributions. We have to prove we can also source funds,” he said.

Under Republic Act 8282, the bulk or 40 percent of SSS investment funds should be placed in government securities, while other limits were provided for other assets.

This include only up to 35 percent in housing, 30 percent in infrastructure projects and other real estate investment products and 15 percent in any particular industry.

As of October last year, SSS’s investment pool totaled P470.19 billion, with an average return of seven percent, data showed.