Solon cautions SSS on investments

The Social Security System (SSS) has so far lost some P6.1 billion as an offshoot of its P8.5-billion worth of equity investments in Equitable PCI Bank Corp., Belle Corp. and failed Urban Banking Corp.

Senate Majority Leader Loren Legarda made this revelation as she urged the SSS to be more prudent in future investment decisions in order to avoid more financial losses.

Legarda cautioned the SSS against repeating blunders committed in the previous administration, when it got involved in "politically-induced" investments that left it holding the empty bag.

The senator said the SSS has so far incurred P5.3 billion in losses because of its P7.5-billion investment in Equitable. She said the pension fund lost another P596.1 million as a result of its P744.6-million investments in Belle.

The SSS made the investments in the previous administration, allegedly at the behest of then President Estrada.

It is also not clear whether or not the SSS could still recover its P171.5-million equity investment in Urban Bank, which collapsed in April 2000.

Legarda said the combined P8.5 billion that the SSS invested in the three firms could have been put to better use.

"The P8.5 billion is now worth only P2.4 billion. Had the P8.5 billion been safely invested and locked away in a five-year deposit account, the money would be easily worth P14.2 billion by 2004," the senator pointed out.

She noted that long-term deposit accounts now earn as much as 10.75 percent net interest income per annum.

The SSS invested in Equitable and Belle in 1999. It invested in Urban Bank in 1998.

The financial difficulties of the SSS have come under congressional scrutiny after it sought a 75-percent increase in the mandatory contribution rate of members to 14 percent from the 8.4 percent.