SSS bullish, eyes P71-B by yearend

The Social Security System (SSS) is hopeful that it would earn at least P71.41 billion by the end of this year, mostly from its investments in government securities.

The expectation will come from the state pension fund’s total investments estimated  at P1.44 trillion by yearend with an expected return on investment (RoI) of 6.11%.

At end-June, SSS’ investment income was at P21.157 billion from an actual investment level of P1.27 trillion and return on investment of 4.53%.

SSS Commissioner Victor Limlingan told reporters that the agency is “balancing the security of our members with the need to increase returns. It’s a tricky balancing act. You don’t want to be too conservative because then you don’t generate the income necessary to pay for pension. At the same time, you need to get a little more aggressive.”

The expected figure of investment income may be attainable because the investment placements of the agency are mostly in government securities, which are considered “stable and secure,” he said.

The state pension fund expects to have an investment level of P724.11 billion in government securities by yearend, with expected earnings of P34.748 billion and an RoI of 6.39%. 

This would be up from the end-June placements worth P629.05 billion with an actual income of P16.045 billion and return on investment of 5.43%.

The rest of SSS’ investments are in corporate notes and bonds, equities, mutual funds, and externally managed funds.

It will also set aside P15 billion for its planned foreign investments by the end of this year.

SSS is also expanding its investments in real estate, with P179.384 billion earmarked by yearend with an expected income of P11.763 billion and a return on investment of 6.11%, up from the end-June actual investment level of P154.555 billion, earnings of P906 million for an RoI of 1.32%.

“Many of our members are very young and they won’t need to draw on their contributions until they’re much later on in life… Our best-performing investment, as many of you have probably confirmed, is real estate, [which] tends to go up in value over the long term. Maybe not in a year or two, but if you look at 20 years, and that’s the time horizon we need for our members. Real estate is a stable, good source of returns,” Limlingan said.

The SSS also reported that its net revenues reached P55.5 billion at end-July from P48 billion as of June. SSS President and Chief Executive Officer Robert Joseph M. de Claro said this was lower from the year-ago level due to the implementation of the pension reform program.