THE SOCIAL Security System (SSS) has generated P204 billion in realized gains and dividend income from its equity investments over the last 57 years, backed by its “disciplined” long-term outlook and diversified strategy.
“SSS invests only in companies with strong earnings track records, stable business performance, and sound fundamentals. It does not place members’ money in risky or speculative investments,” it said in a statement late on Wednesday.
It said its long-term, diversified investment strategy is meant to protect and grow members’ contributions.
The SSS made the statement in response to news reports on its unrealized or paper losses from its investments in certain listed stocks that amounted to nearly P40 billion over the last four years, based on a Commission on Audit report.
It said paper losses refer to a temporary decline in the market value of an investment that has not yet been sold.
“No cash is actually lost unless the asset is sold below its purchase price, and market prices may recover over time,” the SSS said.
It added that unrealized losses should be viewed alongside the “substantial” realized gains and recurring dividend income generated by its equity portfolio.
Among its major stock holdings, it said PLDT Inc. produced a realized gain of at least P36 billion versus an unrealized loss of P17.6 billion.
“SSS also continues to receive an estimated 8% dividend yield from PLDT, making the stock a valuable income-generating asset with potential for further recovery.”
Meanwhile, it reported P3.7 billion in realized gains from Universal Robina Corp. (URC) through dividends and gains on sale, adding that the stock is currently offering a 7.5% dividend yield.
It added that it saw P9.7 billion in realized gains from Security Bank Corp., which provides a 4.88% dividend yield.
“PLDT, URC, and Security Bank are stable companies with established earnings histories and sound fundamentals, making them suitable long-term holdings for the pension fund,” the SSS said.
“Taken together, these investments have contributed to P204 billion in gains and income since 1968, underscoring the value of SSS’ disciplined approach to investing.”
The state pension fund added that its investment portfolio is diversified across different asset types to reduce risks from market volatility.
“Over the past two years, SSS has also focused additional equity investments on the Philippine Stock Exchange index and high-yield instruments such as real estate investment trusts and preferred shares,” it said.
“While stock prices may fluctuate, SSS continues to receive an estimated P9 billion in dividend income annually from its equity holdings. Dividends form part of the total return on investments and contribute directly to the pension fund’s net income.”
The SSS regularly reviews its investment strategy, with the Social Security Commission having two independent committees that meet monthly to monitor both the performance of the funds and the risks undertaken by SSS management, it added.
“The pension fund remains strong and capable of meeting its future benefit obligations to members, pensioners, and their families.”
At end-June, SSS’ investment income was at P21.157 billion from an actual investment level of P1.27 trillion and return on investment of 4.53%.
SSS Commissioner Victor Alfonso A. Limlingan previously said they aim to grow their investment income to P71.41 billion by the end of this year, driven mainly by government securities.
Meanwhile, the state-run pension fund’s net income declined by 28% to P48 billion in the first half from P66.5 billion a year ago. It aims to keep its net profit above P100 billion annually. — Aaron Michael C. Sy