THE Social Security System (SSS) would like to deploy a larger portion of its investment portfolio in overseas markets than the guidelines allow at present to help sustain the life of the fund, support the proposed pension adjustment and boost its income stream.
According to SSS President and CEO Emmanuel F. Dooc, the state-run pension fund is looking to make itself more viable by increasing its exposure to offshore markets by 7.5 percent until this reaches 20 percent, the annual increases capped at 2.5 percent.
“This is just a proposal to achieve what we have stated by making the pension fund a tool for economic activity when it comes to foreign investments. But this is not yet approved,” Dooc said.
Under the proposal, its foreign exposure should increase in phases from 7.5 percent at present to 20 percent. However, the increase will be gradual and in increments of 2.5 percent every year until it hits 20 percent,
according to Dooc.
He said the SSS anticipates better income-generating opportunities from offshore markets, since relying only on domestic channels is not enough to sustain the pension fund’s so-called actuarial life. The state-run pension fund has yet to make investments in offshore markets.
“We feel that there is greater and better opportunities to get better income. We are positioning ourselves, because we realize it is unpalatable to only rely on the increase in contribution. We also have to harness the opportunity to derive higher gain from investments,” he quickly added.
To address the clamor for higher pensions, the SSS will utilize other market sectors to help keep the fund’s life sustainable, instead of relying only on the contributions of its members, according to Dooc.
“We need to pursue legislative initiatives to help strengthen the SSS in facing the challenges confronting it, like the clamor for higher pension. Because we do not want that every time there is a clamor for higher benefits, an increase in contribution will be our automatic answer. This should not be. We have to prove that we can also source funds other than the contributions we demand from our members,” he said.
The SSS exposure on so-called government securities as of October 2016 totaled P182.275 billion, while equities investments totaled another P109.230 billion. The fund has extended loans to members totaling P86.643 billion.