SSS keen on investing in offshore market

MANILA, Philippines — State-run pension fund Social Security System (SSS) remains keen on investing 15 percent or P75 billion of its assets in the offshore market, in a bid to diversify its portfolio and boost its revenues.

In an interview, SSS president and chief executive officer Emmanuel Dooc said the state fund is planning to pursue an offshore investment program as its allowable asset allocation for foreign investments has been doubled to 15 percent.

“We have (a plan to invest offshore) because the asset allocation for foreign investment has been doubled from 7.5 percent to 15 percent. So that will translate to P75 billion. Under the old (allocation), P37.5 billion was the maximum,” Dooc told reporters.

He said this would be part of their strategy to diversify investment portfolio and improve revenues.

Moreover, Dooc said with the enactment of Republic Act 11199 or the Social Security Act of 2019, the SSS may be able to accelerate this plan and implement it within the year. The new law empowers the Social Security Commission, the policy making body of the SSS, to rationalize the pension fund’s investments. 

“Now that the law is here, we may fasttrack that,” he said.

Dooc said the SSS has not been able to invest in the international market in the past due to lack of expertise.

He said the state fund may likely outsource fund managers and advisers for its planned offshore investment program.

The SSS chief said he would also form a group, with third-party consultants and experts, to study the profitability of investing in foreign markets. 

“There are many consultants who are offering their services. So what we will do is to accredit or bid (the services) out,” Dooc said.

As of end-2018, the SSS has total assets amounting to P507.32 billion, or P2.45 billion higher than the 2017 end-year level of P504.87 billion. 

Dooc said the SSS is targeting to increase its investment yield to seven percent by 2020, and nine percent by 2022.

He said the SSS’ return on investments in 2018 was only 5.8 percent due to the depressed domestic equity market.

Domestically, the SSS has tapped three local fund managers, each deployed with P1 billion each to manage. Dooc said these three fund managers were able to perform well.

The SSS chief said the state fund was also able to name nine more local fund managers – three for equities, three for balanced funds and three for fixed-income investments – who will also manage P1 billion each.

Meanwhile, Dooc said the state pension fund is also planning to expand its pension loan and education loan programs as part of its investment strategy.

“We’d like to expand our pension loan programs. And if I may add, I want to also intensify our education loan because I honestly feel that education is a very good investment for the members of SSS. We should help them to send their kids through colleges,” he said.

Furthermore, Dooc said the SSS is also eyeing to develop its assets to provide itself a steady stream of income in the long-term.

“Our plan is to hold them and then develop them to provide us a stream of income over the years to match out long-term obligations. What we are doing is we want to bid them out either as a joint venture or as a long-term lease so we can benefit from utilizing these properties,” he said.

He said one of their properties in Ayala, Rufino in Makati City, may be developed first within the year, followed by a property in Bonifacio Global City in Taguig, and an East Triangle property at the corner of EDSA and East Ave. in Quezon City.