The Social Security System (SSS) reported an investment portfolio of ₱1.3 trillion at the end of the third quarter of 2026, as the state pension fund began investing overseas with an initial $200,000 placement in US government Treasury securities.

Newly appointed SSS President and CEO Victor Limlingan said the pension fund plans to increase its offshore allocation to around 1% of its Investment Reserve Fund (IRF) by the end of 2026, then raise it to as much as 5% by the end of 2027 if its initial investments and supporting systems perform as intended.

The move marks SSS’ first reported foreign investment and forms part of its plan to diversify its portfolio while improving investment returns.

SSS targets higher investment returns

SSS recorded an annualized return on investment of 4.01% at the end of the third quarter. It is targeting an investment portfolio of ₱1.441 trillion and a return of 6.11% by the end of 2026.

Government securities made up the largest portion of the portfolio at ₱644.9 billion, followed by equities at ₱179.9 billion, member loans at ₱174.7 billion, and real estate at ₱154.6 billion.

Other investments, including corporate bonds, bank deposits, externally managed funds, and mutual funds, totaled nearly ₱150 billion.

SSS also recorded ₱338 billion in revenue during the first nine months of 2026, mainly from ₱300.2 billion in member contributions and ₱37.9 billion in investment income.

Expenditures reached ₱275.3 billion, including ₱266.3 billion in benefit payments and ₱8.96 billion in operating expenses. This left the pension fund with net revenue of ₱62.471 billion.

SSS plans to expand its foreign investments

SSS began its offshore investment program with US Treasuries, which Limlingan described as a way to test its systems before committing more funds to foreign assets.

The pension fund previously planned to start with an offshore allocation of 1% of its IRF. Its longer-term target is to reach as much as 5% by 2027, although its charter allows offshore investments of up to 7.5% of the fund.

Aside from US government securities, SSS is studying investments in high-dividend companies, particularly those linked to precious metals. It is also considering additional investments in real estate and infrastructure.

The agency has published a bid for an investment consultant who will provide expertise for its offshore investment program over the next two years.

Audit flags rising paper losses

The investment expansion comes as the Commission on Audit (COA) raised concerns over SSS’ paper losses, which rose by 245% to nearly ₱40 billion in 2025 from ₱11.6 billion in 2021.

COA cited the lack of formal stop-loss thresholds, or predetermined loss limits that would trigger corrective action to help protect the IRF.

Limlingan said he did not favor automatically selling investments once they reached a set loss level. Instead, he proposed a flagging system that would prompt investment professionals to review the situation and decide what action to take.

The approach would give SSS’ investment team room to assess market conditions and the outlook for each asset rather than relying on an automatic sell-off rule.

As SSS expands into foreign markets and considers additional asset classes, its challenge will be to balance potential returns against investment risks.

The fund’s performance matters to members and pensioners because investment income helps support the benefits SSS pays alongside contributions collected from members and employers.