By: Roy Bersales
The Social Security System (SSS) is seriously contemplating to invest in infrastructure projects to increase the benefits of its members in the future.
In a statement, Social Security Commission (SSC) Chairman Amado D. Valdez said SSS’s participation in the infrastructure projects is an “additional revenue that will enable the fund to grant higher pensions and benefits for its growing membership and beneficiaries.”
Valdez emphasized the plan “is the start of an economic revolution.”
If pursued, this is the first time in the entire history of the SSS that it will take part in a project that has bigger earnings compared to what the previous SSC heads have accomplished.
Valdez strongly believed that if the SSS joins in the government’s infrastructure projects will lead to better income for the agency, which will enable it to finance its future plan to further increase the benefits of its members, including the almost 2 million pensioners.
President Rodrigo R. Duterte has approved 27 infrastructure projects through public-private partnership (PPP) this November.
This is apart from what the previous administration has started.
Valdez said SSS is open to PPP arrangement that fully complies with the requirements set by the Social Security Act of 1997, which is also known as the SSS Charter.
The SSS Charter allows the agency to allot up to 30 percent of its investment reserve fund for domestic infrastructure projects such as roads, bridges, ports and telecommunications as long as these come with a government guarantee and would prioritize SSS in the distribution of earnings.
However, the SSS Law provides strict guidelines to ensure the safety, liquidity and good yield of SSS investments.
“We plan to make it compulsory for PPP proponents to reserve for SSS the right of first refusal to 25 percent equity participation,” Valdez said.
Valdez pointed out that it 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.”
He noted that 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,” he said.
Valdez explained that “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 admitted that the idea of investing in infrastructure projects got from the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan, two of the largest Canadian pension funds, which earlier this year partnered with a Mexican infrastructure company for a toll road development project in Mexico.
“Finding more ways to further improve SSS financial viability and giving more meaningful benefits are among the reforms we plan to pursue under the current administration. Generating revenues from innovative investments is one of the options we intend to take towards achieving these goals especially that the challenge to improve the administration of our pension program is being discussed,” he added.
Records showed that the SSS manages an investment portfolio valued at P470.14 billion as of September 2016.
Government securities accounted for the largest share at 39 percent or P180.46 billion, followed by equities at 24 percent or P111.22 billion and member loans at 18 percent or P85.93 billion.
Apart from enhancing the fund’s long-term viability and benefit levels, SSS also aims to improve the automation of its procedures and other aspects of SSS operations to deliver better services to members.