SSS to pick between own people, foreign group to manage its NPAs

The Social Security System (SSS) is considering either hiring a foreign asset management company (AMC) or forming one itself. An AMC whether hired or formed internally is tasked to eliminate the company’s non-performing assets (NPAs) through various methods including liquidation or outright sale.

The government-run pension fund fears that due to its inability to dispose of bad assets, coupled with poor collection contributions and increasing values in benefit payments, the system’s funds will be depleted by 2015.

"We are still looking at whether we would tap a foreign group or settle with our own people," SSS president and chief executive officer Corazon de la Paz said.

The SSS has some P300 million worth of foreclosed properties plus receivables amounting to P28 billion from various housing government and private agencies.

While investment earnings grew by P18.8 percent to P14.66 billion last year, disbursements reached P17.69 billion for retirement claims while death benefits expanded by nine percent to P12.96 billion.

The SSS had earlier started exploratory talks with international fund managers to co-manage its investment funds amounting to over P165 billion.

However, talks were suspended when then chief executive officer Vitaliano N. Nanagas II was replaced by de la Paz due to an internal squabble.

In 2001, the pension fund’s loan and investment portfolio reached P158 billion. The year before, investments reached P165 billion with its average return hitting a decent 7.4 percent.

However, earnings were offset by losses in the equities market due to the controversial deals between former President Joseph Estrada and some officials of the SSS.

Last year, the system’s net income decreased by 41.57 percent to P2.67 billion from the P4.57 billion in 2000.

"Payments of benefits is outstripping earnings and contributions," lamented the SSS chief executive. De la Paz added they would be satisfied with a single-digit earnings growth rate this year.