The state-run Social Security System (SSS) is looking at investing offshore for the first time ever this year, after Republic Act No. 11199 or the Social Security Act of 2018 increased its allocation for foreign investments to 15 percent of the pension fund.
“We have not been doing that (foreign investments) because of lack of expertise, so we will be engaging fund managers and advisers. Now that the law is here, we may fast-track that,” SSS president and chief executive Emmanuel F. Dooc told reporters last week.
Asked if the offshore investment could be done this year, Dooc replied: “I think so.”
“That is one thing that we have to do in order to diversify [our investments] and to get higher yield,” Dooc said, adding that returns from these investments would stabilize the SSS’s fund life.
Before the foreign investment foray, Dooc said he would form a “study group” to look into the plan and engage consultants and experts as the SSS had no track record in offshore investments.
“But there are many consultants who are offering their services, so what we will do is to accredit [candidates] or bid out the contract,” he added.
Under RA 11199, the SSS can now invest up to 15 percent of the Investment Reserve Fund in foreign currency deposits or investment-grade rated foreign currency-denominated debts, prime and non-speculative equities, as well as other Bangko Sentral ng Pilipinas (BSP)-approved financial instruments or other assets issued overseas.
Dooc said the foreign investment cap used to be just 7.5 percent of the fund. However, this allocation has remained unused due to lack of confidence in foreign investing.
He said the bigger asset allocation for foreign investment will translate to about P75 billion.
Under the new law, the SSS’s future investments in foreign instruments or assets must be listed on the bourses of the respective countries where they were issued.
Also, the issuing companies must be profitable during the past three years and have paid dividends at least once during that three-year period.