In order to raise revenues that would be used to fund higher benefits and pensions for its members, state-run pension fund Social Security System is planning to invest in infrastructure projects.
“This is 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,” Social Security Commission Chair Amado D. Valdez said in a statement.
“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,” Valdez noted.
According to the SSS, the Social Security Act of 1997 allows it to use up to 30 percent of the investment reserve fund in local infrastructure projects, including bridges, ports, roads and telecommunications.
Such investments, however, should be guaranteed by the government.
“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 added.
The SSS could also invest in public-private partnership (PPP) projects as long as these are compliant with its charter, which provides strict guidelines to ensure investments have good yields and are liquid and safe, Valdez said.
For one, “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.
He said the agency was also “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.”
As of September, the SSS was managing a P470.1-billion investment portfolio, including P180.5 billion in government securities, P111.2 billion in equities, and P85.9 billion in members’ loans.