Landbank, DBP tapped to manage P2 billion SSS funds

MANILA, Philippines — Provident fund Social Security System (SSS) has tapped government-owned banks to manage P1 billion each to generate additional earnings for the agency over the next three years.

In an agreement, SSS tasked the Land Bank of the Philippines and the Development Bank of the Philippines (DBP) to manage P2 billion worth of investible funds for pure fixed income.

This means Landbank and DBP got P1 billion each from SSS, which they have to grow over the next three years.

SSS president and CEO Rolando Macasaet said Landbank and DBP are tasked to generate gains from the capital. As such, the banks may place the funds in investment instruments for as long as they fall within the risk parameters set by SSS.

“We see that we will greatly benefit from tapping external fund managers to manage a portion of our investible funds. We can take advantage of their expertise to help grow the SSS funds and to diversify the investment portfolio,” Macasaet said.

Macasaet said SSS released the funds to Landbank and DBP in October, dividing them into two tranches: first, on Oct. 13 and second, on Oct. 17.

Prior to this, SSS turned to private banks to manage a sum of its investible funds.

SSS tapped the services of the Bank of the Philippine Islands Asset Management and Trust Corp. and Security Bank Corp. Trust and Asset Management to grow P2 billion from pure fixed income.

Under Republic Act 11199 or the Social Security Act of 2018, SSS may ask for help from local and foreign banks to take care of its Investment Reserve Fund (IRF). The IRF may be invested in financial instruments, providing additional income for SSS.

SSS senior vice president for fund management Ernesto Francisco Jr. said the agency has turned to local banks for the management and growth of its investible funds since 2016. This way, SSS may access financial opportunities where the agency has no competitive advantage.

“Tapping more investment savvy fund managers is a best practice worldwide, particularly among pension funds [like SSS],” Francisco said.

To date, SSS has awarded the management of seven investment contracts for balanced fund, pure equity fund, and pure fixed income fund, amounting to P8 billion, to five fund managers.