State-run Social Security System’s (SSS) investment income in 2020 slid by a fifth compared to the previous year’s level as lockdown measures’ impact on the economy shook the Philippine stock market.
SSS President and Chief Executive Officer Aurora C. Ignacio said the state-run pension fund’s investment portfolio provided “decent” earnings last year at P32.47 billion. The figure is 20.75-percent lower than the P40.97 billion the pension fund manager recorded in 2019.
“The nationwide community quarantine measures drastically affected the stock market since March 2020. Despite this, SSS investments continued to perform well and provided decent returns last year,” Ignacio said in a statement over the weekend.
The pension fund also boasted attaining 5.89 percent in its return on investments (ROI), outperforming national economic indicators, particularly the 9.50-percent contraction in the gross domestic product (GDP) and the 2.6-percent average inflation rate last year. It was also ahead of the 10-year Treasury Bond (T-bond) and 364-day Treasury Bill (T-bill) rates, which averaged 3.43 percent and 2.42 percent, respectively.
“SSS investment performance has consistently outperformed major investment benchmarks,” Ignacio was quoted in the statement as saying. “Whatever the prevailing market conditions, we continued to perform well in our investment activities. As guided by our charter, we adhere to the principles of safety, good yield and liquidity.”
From 2011 to 2020, the SSS’s annual ROI averaged 8.07 percent, outperforming the 10-year annual averages of 4.72 percent for the GDP growth, 4.82 percent for the 10-year T-bond, 2.92 percent for the inflation rate and 2.63 percent for the 364-day T-bill.
The largest contributor to SSS’s investment income last year is still government securities at 42 percent, bringing in P13.71 billion. The figure, however, is slightly down from P13.84 billion in 2019, according to SSS Executive Vice President for Investments Sector Rizaldy T. Capulong.
Member loans came in second, accounting for 21 percent of the total investment income. Income from member loans also dropped to P6.71 billion in 2020 from P8.97 billion in 2019. It also posted a 6.82 percent ROI last year.
The combined income from government securities and member loans already comprise more than half of the total SSS investment earnings last year with P20.42 billion, Capulong said.
“Properties are also generating good returns for the funds of our members as it recorded the highest ROI last year among SSS investments at 9.17 percent. About 16 percent of the entire SSS investment income came from properties that contributed P5.08 billion, which remains a major component in our investment strategies,” Capulong stated.
The P589-billion SSS investment portfolio is broken down as follows: government securities (41.86 percent), member loans (19.09 percent), equities (16.73 percent), properties (10.06 percent), corporate notes and bonds (5.83 percent), bank deposits (2.80 percent), external funds (2.17 percent) and housing and development loans (1.46 percent).
Ignacio said they can only invest their reserve fund on types of investment prescribed under Republic Act 11199 or the Social Security Act of 2018.
The law specified the limitations on the investment reserve funds that can be allotted per type of investment of which 60 percent in private securities, 5 percent in housing, 30 percent in real estate-related investments, 25 percent in short and medium-term member loans, 30 percent in government financial institutions and corporations, 15 percent in any particular industry, 15 percent in foreign-currency-denominated investments, 5 percent in private-sponsored infrastructure projects without guarantee, 5 percent in private and government-sponsored infrastructure projects with guarantee, and 5 percent in private and government-sponsored infrastructure projects.
Preliminary data also showed member contributions to SSS dropped by 7.1 percent to P204.75 billion in 2020 from previous year’s collection of P220.38 billion. It was also 17 percent below 2020 target of SSS at P246.83 billion, the Department of Finance earlier said.
The drop was attributed to 1.5 million members being unable to pay their contributions because of job losses.
Unemployment insurance benefit claims last year also rose nearly 10-fold to P1.71 billion with 136,000 beneficiaries from only P178 million in 2019 availed by 15,000 claimants.
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