AS declining fertility rates risk slowing the growth of the Social Security System’s (SSS) contributor base, the pension fund will prioritize boosting investment returns instead of raising contribution rates.
‘I have no plans of asking lawmakers because life is hard. A lot of our countrymen are barely earning enough to survive,’ said SSS President and Chief Executive Officer Victor Alfonso A. Limlingan when asked whether the current 15-percent contribution rate would be increased.
Workers are already grappling with high living costs amid the Middle East crisis and the threat of a brewing Super El Niño, Limlingan said in a briefing on Friday.
‘If I increase the contribution rate, their take-home pay will decrease,’ he added. ‘I’m very careful to ask for that, especially now that times are bad.’
Instead of increasing the contribution rate, Limlingan said SSS would focus on improving investment returns to help sustain the pension fund.
The pension fund has begun diversifying its portfolio overseas, with Limlingan disclosing a recent $200,000, or roughly P12.6 million, investment in US Treasury securities.
SSS is targeting an allocation equivalent to about 1 percent of its investment reserve fund (IRF) this year.
‘We have invested offshore but in safe, secure US Treasuries, which are considered safe assets. It protects us if the peso depreciates. It’s a small amount, but we start there,’ he said.
SSS aims to increase the allocation to 5 percent next year, if the initial investments work as intended, Limlingan added.
The pension fund is also looking to expand its real estate holdings, particularly raw land, which Limlingan said could appreciate in value over time.
Limlingan also floated partnerships with businesses, including foreign hotel operators that cannot directly own Philippine land, under arrangements that would allow SSS to own the land and earn income from its use.
Moreover, SSS is looking to invest in high-dividend companies and mining companies because their earnings could benefit from higher gold and copper prices.
‘If we have gold miners and copper miners, so if the peso weakens, the gold that they have will be sold at a higher price,’ Limlingan said.
As for SSS’s long-term investment strategy, Limlingan said he sees potential investments in railways, bridges and other infrastructure projects.
‘Our country needs a lot of investments in rail and bridges,’ Limlingan said. ‘It’s a little riskier, [but] I think infrastructure is something that should be part [of] eventually, but not yet.’
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As of September, SSS’s total investment level stood at P1.304 trillion, of which 49 percent, or P644.944 billion, is invested in government securities.
About 14 percent, or P179.894 billion, is in equities, while the remaining are in loans to members or pensioners, real estate, corporate notes and bonds, bank deposits, externally managed fund and mutual funds.
Under its charter, SSS may invest up to 7.5 percent of its IRF offshore.
SSS’s income from investments amounted to P37.858 billion, while its net income reached P67.741 billion as of September.