SSS targets to grow investible funds

SOCIAL Security System (SSS) is looking to grow its investibles this year as market conditions stabilize and amid a strong economic outlook.

The state-run pension fund is also looking to tap more banks to manage funds worth P1 billion each this year, its officials told reporters on Thursday.

“There are two sources of growth. We’re very optimistic on new contributions and there haven’t been any calamities so far. We expect to grow on that front. We’re also optimistic on investments. The stock market is strong and stable. We have investments there already, so we expect to grow with the Philippine economy and the stock market,” SSS Fund Management Group Senior Vice-President Ernesto D. Francisco, Jr. said.

The investible fund of the SSS stands around P750 billion to P800 billion, depending on market value, he said. Of the total, about 15% or more than P130 billion is invested in the stock market.

“It’s (the market) now up and was very promising in the first quarter. We expect a good recovery year for the stock market,” Mr. Francisco said.

He said the SSS will continuously invest 15-20% of its equity returns into the Worker’s Investment and Savings Program (WISP).

“We expect roughly P60 billion coming from there. So, on a regular basis, we’re just investing the equity fund there,” he added.

Meanwhile, government securities make up almost 50% of SSS’ investments, Mr. Francisco said. SSS also invests in corporate bonds and real estate investment trusts (REIT).

The pension fund will continue to watch interest rate movements as it is reliant on fixed-income investments, he said.

“It’s an opportunity for us to accumulate while rates are higher for longer. We continue to monitor the movement of interest rates… We take advantage since it’s long term. We keep on locking in,” Mr. Francisco said.

SSS will also continue to outsource the management of its funds, he added, noting they could tap five to six more banks this year.

SSS previously tapped the Land Bank of the Philippines, the Development Bank of the Philippines, Rizal Commercial Banking Corp., Bank of the Philippine Islands, Security Bank Corp., and ATRAM Trust Corp, to manage its funds.

“We outsource on a very competitive process. Normally, we give out two- to three-year mandates. I think we like giving mandates as big as 9-10 mandates depending on the type of mandate, whether it be a balanced fund, fixed-income mandate, or pure equity mandate,” Mr. Francisco said.

“After that, we’re also looking at outsourcing overseas. We have to get the legal backing and basis and we have a lot of requirements to get such as global custodians, and we’re doing that. So, maybe it will be clearer later in the year how we’ll outsource abroad,” he added.

Only about 2% of SSS’ investible fund is being handled externally, he noted.

CONTRIBUTION HIKE
Meanwhile, SSS Senior Vice-President and Chief Actuary Edgar B. Cruz said he expects the scheduled contribution hike in 2025 to push through as its fund life is currently only expected to last until 2054.

Under Republic Act No. 11199 or the Social Security Act of 2018, SSS members’ contribution rate will increase by one percentage point to 15% in 2025.

“Our unfunded liability is expected to grow because our demographic is shifting. That’s just the nature of social insurance schemes. Because of the aging population, our unfunded population is expected to grow,” Mr. Cruz said.

SSS also expects benefit payouts to outpace contributions by 2039, he said.

“Right now, there are more people contributing than the money that we’re paying out, which is why our reserve funds increase every year,” Mr. Cruz said. “There will now be more benefits going out than contributions coming in, so the reserve fund will slowly go down until it reaches zero. That’s when the fund life ends.”

Higher contributions will also mean increased benefits for SSS members, he added. — A.M.C. Sy

SSS targets to grow investible funds
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