(By the SSS Media Affairs Department | Wednesday 16 Nov 2016; 9:59 PM)
The Social Security System (SSS) is looking at investing in infrastructure as a source of additional revenue that will enable the fund to grant higher pensions and benefits for its growing membership and beneficiaries, citing that this is the start of an “economic revolution.”
Social Security Commission Chairman Amado D. Valdez said that “This an opportunity for SSS members, who comprise the working class, to take part in the investment economy and experience owning a road development project which would generate lifetime earnings.”
Valdez added that individually, SSS members have financial limitations that prevent them from participating in investment activities. “But through the pooled contributions of SSS members, we harness a powerful tool to empower them to become vital players in investing for road development projects which has been largely dominated by large companies,” he said.
The SSS charter allows the agency to allot up to 30 percent of its investment reserve fund for domestic infrastructure projects such as roads, bridges, ports and telecommunications as long as these come with a government guarantee and would prioritize SSS in the distribution of earnings.
“Beyond our primary aim of enhancing SSS revenues so that the fund can provide higher benefits, investing in infrastructure also has a multiplier effect which can boost national economic growth. Having better roads in terms of quality and reach helps promote local tourism and commerce,” Valdez said.
SSS took its cue from a similar move by the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, two of the largest Canadian pension funds, which earlier this year partnered with a Mexican infrastructure company for a toll road development project in Mexico.
Valdez said SSS is open to a Public-Private Partnership (PPP) arrangement that fully complies with the requirements set by the Social Security Act of 1997, which is also known as the SSS charter. The law provides strict guidelines to ensure the safety, liquidity and good yield of SSS investments.
“We plan to make it compulsory for PPP proponents to reserve for SSS the right of first refusal to 25 percent equity participation,” he added.
SSS is pushing for charter amendments such as the reassessment of investment ceiling limits to allow more flexibility and enable SSS to be more responsive to the current market landscape as compared to two decades ago when the Social Security Law was enacted.
“Finding more ways to further improve SSS financial viability and giving more meaningful benefits are among the reforms we plan to pursue under the current administration. Generating revenues from innovative investments is one of the options we intend to take towards achieving these goals especially that the challenge to improve the administration of our pension program is being discussed,” he said.
SSS manages an investment portfolio valued at P470.14 billion as of September 2016. Government securities accounted for the largest share at 39 percent or P180.46 billion, followed by equities at 24 percent or P111.22 billion and member loans at 18 percent or P85.93 billion.
Apart from enhancing the fund’s long-term viability and benefit levels, SSS also aims to improve the automation of its procedures and other aspects of SSS operations to deliver better services to members.