The Social Security System (SSS) is pushing for changes in its charter, which was enacted nearly two decades ago, that would provide the pension fund greater investment flexibility to bolster its generation of needed revenues for granting higher benefits for members.
Social Security Commission’s (SSC) Chairman Dean Amado D. Valdez said that SSS investment capabilities based on the provisions under the Social Security Act of 1997 are limited amid current market trends.
“Aside from expanding our investment portfolio, we seek the amendment of the conservative provisions of the SSS charter particularly on the investing capacities of the Commission,” he said.
The SSS charter limits the powers of the Commission to invest its reserve fund. At present, SSS could only invest in private securities, housing, real estate, short and medium-term member loans, government financial institutions and corporations, infrastructure projects, foreign currency denominated investments, and any particular industry that the Commission deems profitable.
The SSS aggressively pushes for direct capital infusion of the pension funds to tollway constructions under the Private-Public Partnership (PPP) to generate lifetime income, and to provide more meaningful benefits to its members.
Dean Valdez said that this is the first time that SSS is considering this kind of investment activity. “In the past, SSS invested in the South Luzon Tollways through corporate bonds which generated a yield of close to seven percent. This time, we want to explore the possibility of funding projects for new tollways, income of which is for a lifetime. We plan to invest 25 to 30 percent of our reserve fund in these road development projects and we expect the same rate of return, if not better,” he said.
“SSS seeks include new investment vehicles where SSS can invest their reserve fund without compromising the basic investment principles of safety, good yield and liquidity. We hope that this legislation will be passed immediately to help us in our pursuit to increase the income of the agency and enhance the benefits for our members,” said Dean Valdez.
SSS earlier announced its plan to implement the P2,000 pension hike. The first P1,000 across-the-board pension increase will be given in 2017, and an additional P1,000 pension increase in 2022, or earlier with corresponding legislation.
Dean Valdez noted that with this implementation, SSS and its members are in a win-win situation. He adds that this is the best option for SSS so as not to exhaust its fund. “While we grant our pensioners the P1,000 increase, we will invest the remaining money in tollway projects with sovereign guarantee for additional revenue. Hopefully, this plan will help us grant the additional P1,000 earlier than 2022,” he said.
“Hindi dapat isang kahig, isang tuka ang pension fund dahil ito ang aasahan nating pondo pagtanda natin o kapag may sakit tayo at hindi na tayo makagpagtrabaho. Kaya ang request natin sa Kongreso ay P1,000 muna para mapaikot natin ang fund sa investments with sovereign guarantee. Win-win tayo,” Dean Valdez said.