GSIS eyes USD800-M overseas investment in 2018

MANILA -- State pension fund Government Service Insurance System (GSIS) will invest some USD800 million overseas this year as it vies to be more aggressive in sustaining its actuarial life strong, among others.

In a briefing Tuesday, GSIS President and General Manager Jesus Clint Aranas said they wanted to take advantage of the good performance of global markets to date.

He said average return on investment for global market assets to date was around 5.5 percent, which, however, was below the 9 percent per annum ideal rate being eyed by the pension fund’s officials.

He declined to say a definite time when they plan to execute the investment this year, saying it “depends on the behavior of global market.”

“It is really a testing ground, testing the waters in investments. It’s not so big,” he said.

To date, GSIS’ investments overseas is about 10 percent of its total assets.

GSIS Senior Vice President Garcita Gilda Bocanegra said the mandate was for the funds to be placed in several assets such as equities, fixed income and other investible assets, to be managed initially by two fund managers.

She said the earlier the funds would be deployed, the better “so we can increase the return of our assets.”

She also reported that as of November 2017 GSIS’ total assets grew by 8 percent to PHP1.09 trillion, boosted by the doubling of its financial assets to PHP52.12 billion.

Bulk of the agency’s assets, accounting for 62 percent, are placed in financial investments followed by the 24 percent allocated for loans to its members, 6 percent in  investment properties, and 4 percent each are in cash as well as in property, equipment and other assets.

The agency registered a 52.52 percent rise in net income in the first 11 months last year to PHP84.15 billion.

Bocanegra said revenues from insurance contributions of its members went up 11.2 percent after the number of members rose to 1,707,795.

She said disbursement on social insurance claims and benefits increased by 13 percent to around PHP85 billion because of higher payments to increased number of pensioners, payments to pensioners’ survivors and life insurance and retirement claims.

Amid the increased benefit disbursement, Aranas said the agency continued to enjoy a long actuarial life of around 31 years or until 2049.

This, he said, was the reason why they need to look for more options to further lengthen the pension funds’ ability to service their members.

“We want to keep the fund sustainable,” he said.

 Meanwhile, GSIS officials remain on the lookout to increase investments on infrastructure projects by around USD400 million.

This as the government embarks on a massive infrastructure program called “Build, Build, Build”, which has a planned budget of at least PHP8 trillion until the end of the Duterte administration in mid-2022.

“We really want to be part of that…preferably in equities. We are looking for the right partners,” Aranas added.

In 2016, GSIS officials said they planned to increase investments in infrastructure-focused projects given the large requirements for these projects in the domestic economy.

In 2012, GSIS teamed-up with Manila-based lender Asian Development Bank (ADB), Macquarie Infrastructure and Real Assets (MIRA), the world’s largest manager of infrastructure assets and a part of the Macquarie Group; and Dutch pension fund asset manager APG to form the private equity fund called Philippine Investment Alliance (PNAI) for Infrastructure, which amounts to PHP25 billion or USD625 million.

GSIS’ share in the fund is about 64 percent, amounting to USD400 million.

The fund is part of the consortium that won the bidding for the extension of the Light Rail Transit (LRT) Line 1 to Cavite.

Other projects that PNAI has funded so far include a wind-powered power project in northern Philippines, solar power project in Negros in the Visayas and base-load power plant in Mindanao. (PNA)