Loophole in Maharlika bills lets SSS, GSIS invest in fund
MANILA, Philippines — The bill passed by the House of Representatives in December 2022 and the bill being debated in the Senate to create the Maharlika Investment Fund allow for the Social Security System and the Government Service Insurance System to invest in the proposed sovereign wealth fund.
While both House Bill 6608 and Senate Bill 2020 prohibit government companies providing social security to Filipinos such as the SSS, GSIS and the Home Development Fund from being requested or required to contribute to the Maharlika fund, there is a loophole in both measures that could let these entities participate in the fund.
In the House bill, this loophole can be found in Section 11, which states that other government financial institutions (GFI) and companies may be allowed to contribute to the Maharlika fund as long as it is approved by their board of directors.
A similar provision can be found in Section 12 of the Senate bill.
‘Not prohibited’
Sen. Mark Villar, who is shepherding the passage of SB 2020, confirmed Monday during debates with Sen. Risa Hontiveros that the GSIS and SSS are not prohibited from investing in the Maharlika fund.
“It is something that they’re not prohibited from doing, which I don’t think they should be prohibited from making any kind of investment that may be beneficial to their members,” Villar said.
Earlier iterations of the Maharlika fund proposal required the SSS and GSIS to invest in it, prompting intense backlash from the public and senators who aired their vehement objections to the inclusion of the pension funds in the contentious measure.
House members then removed this provision, but retained in the version—which passed the chamber—the option for other GFIs and state firms to contribute to the Maharlika fund.
“This provision seems innocent,” Sen. Risa Hontiveros said in Filipino during her interpellation of the Maharlika fund. “I would really rather not have this section at all.”
“After the people’s anger was felt and the SSS and GSIS funds were removed from the House version, we are now opening a backdoor in the version of the Senate,” Hontiveros added.
‘P1 trillion at stake’
She raised fears that the GSIS and SSS may be influenced politically as Malacañang appoints who sits on their respective board of directors.
Citing an unnamed “reliable source,” she also claimed that GSIS president and general manager Jose Arnulfo Veloso was the brains behind the creation of the Maharlika fund.
“If the GSIS board changes their investment strategy, then it can gamble more than P1 trillion in its funds for Maharlika,” Hontiveros said.
Villar, however, assured that GFIs have managed their funds “very professionally.”
“There’s nothing in the bill that will change the investment strategy of these institutions. There’s no reason for us to think that the safety of the investments of the members will be compromised in any way by the Maharlika,” he said.
The Senate leadership is aiming to follow Malacañang’s deadline to approve the Maharlika fund before President Ferdinand "Bongbong" Marcos Jr.’s State of the Nation Address in July, with Senate Majority Leader Joel Villanueva raising the possibility of holding a rare Thursday session to ensure its passage.
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