The Social Security System (SSS) is eyeing to actively invest overseas this year, with the newly-signed Social Security Act of 2018 enabling the pension fund to double its allowed asset allocations abroad.
Emmanuel Dooc, SSS president and chief executive officer, said the pension fund could previously allocate only 7.5 percent of its investible funds overseas. The new law has increased this to 15 percent.
However, the pension fund does not have any international investments even though it is allowed to invest a certain percentage abroad.
“We have not been doing that because of lack of expertise, so we will be engaging, hopefully, fund managers and advisers. That is one thing that we have to do in order to diversify and also to get a higher yield,” Dooc said.
The SSS had previously mentioned it was looking into the possibility of investing overseas to diversify its portfolio and to take advantage of possible good returns abroad, but its plans have yet to push through.
The charter amendment redistributed investment ceilings which allowed the pension fund to set aside a bigger percentage of its investments in specific areas that are currently being limited.
Dooc said the new law gives the commission more flexibility in pursuing certain investment processes.
“Yes, (we have plans to invest abroad) because the asset allocation for foreign investments has been doubled. So that will translate to P75 billion. Under the old law… the maximum amount is around P37.5 billion,” Dooc said.
“If we can get a better yield, why not? And (if it will provide) stability and diversification. I will constitute a study group to do that (to check if it is a good time to invest abroad), and we’ll be engaging consultants and experts. There are many consultants who are offering their services. So what we will do is to accredit or bid it out,” he added.
Dooc said the SSS also plans to hold on to its properties and develop them to provide the pension fund with a steady stream of income over the years, to match its 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.
Dooc said he is hopeful the pension fund’s return-of-investment will hit seven percent in 2020, and by 2022, nine percent.
In June last year, the pension fund invested P1 billion each in PhilEquity Fund Inc. as managed by Philequity Management Inc.; Sun Life of Canada Prosperity Balanced Fund Inc. as managed by Sunlife Asset Management Company Inc.; and Philippine Stock Index Fund Corp. as managed by BPI Investment Management Inc.
It was the first time in 61 years that the pension fund invested in mutual funds.
Dooc said SSS has also chosen nine local fund managers who will each manage a P1-billion fund.