Section 26Sec./Art. 26

Investment of Reserve Funds. - All revenues of the SSS that are not needed to meet the current administrative and operational expenses incidental to the carrying out of this Act shall be accumulated in a fund to be known as the "Reserve Fund".

Such portions of the Reserve Fund as are not needed to meet the current benefit obligations thereof shall be known as the "Investment Reserve Fund" which the Commission shall manage and invest with the skill, care, prudence and diligence necessary to earn an annual income not less than the average rates of treasury bills or any other acceptable market yield indicator in any or in all of the following undertaking, under such rules and regulations as may be prescribed by the Commission: Provided, That investments shall satisfy the requirements of liquidity, safety/ security and yield in order to ensure the actuarial solvency of the funds of the SSS: Provided, further, That the SSS shall submit an annual report on all investments made to both the Senate and House of Representatives:

(a) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of the Philippines, or in bonds, securities, promissory notes or other evidence of indebtedness to which the full faith, credit and unconditional guarantee of the Government of the Philippines is pledged: Provided, That at least fifteen percent (15%) of the investment reserve fund shall be invested for these purposes:

(b) In bonds, securities, promissory notes or other evidence of indebtedness of the Government of the Philippines, or any of its agencies or instrumentalities to finance domestic infrastructure projects such as roads, bridges, ports, telecommunications, and other similar projects: Provided, That the instruments issued by an agency or instrumentality of the government shall be guaranteed by the Government of the Philippines or any government financial institution or acceptable multilateral agency: Provided, further, That the SSS shall have priority over the revenues of the projects: Provided, finally, That such investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

(c) In bonds, securities, promissory notes or other evidence of indebtedness of government financial institutions or government corporations with acceptable credit or guarantee: Provided, That such investments shall not exceed thirty percent (30%) of the Investment Reserve Fund;

(d) In bonds, securities, deposits, promissory notes or other evidence of indebtedness of any,bank doing business in the Philippines and in good standing with the BSP to finance loans to private corporations doing business in the Philippines, including schools, hospitals, small-and-medium scale industries, cooperatives and nongovernmental organizations, in which case the collaterals or securities shall be assigned to the SSS, under such terms and conditions as the Commission may prescribe: Provided, That in the case of bank deposits, they shall not exceed at any time the unimpaired capital and surplus or total private deposits of the depository bank, whichever is smaller: Provided, further, That said bank shall first have been designated as a depository for this purpose by the Monetary Board of the BSP: Provided, finally, That such investments shall not exceed forty percent (40%) of the Investment Reserve Fund;

(e) In bonds, securities, promissory notes or other evidence of indebtedness of shelter agencies of the National Government or financial intermediaries to finance housing loans of members; and in long-term direct individual or group housing loans giving priority to the low-income groups, up to a maximum of ninety percent (90%) of the appraised value of the properties to be mortgaged by the borrowers; and

In short and medium-term Mans to members such as salary, educational, livelihood, calamity, and emergency loans: Provided, That not more than five percent (5%) of the Investment Reserve Fund at any time shall be invested for housing purposes: Provided, further, That not more than twenty five percent (25%) of the Investment Reserve Fund shall be invested in short-and medium-term loans;

(f) In bonds, securities, promissory notes or other evidence of indebtedness of educational or medical institutions to finance the construction, improvement and maintenance of schools and hospitals and their equipment and facilities: Provided, That such investments shall not exceed ten percent (10%) of the Investment Reserve Fund:

(g) In real estate property, including shares of stocks involving real estate property, and investments secured by first mortgages on real estate or other collaterals acceptable to the SSS: Provided, That such projects and investments shall, in the determination of the Commission, redound to the benefit of the SSS, its members, as well as the general public: Provided, further, That investment in real estate property and joint ventures including shares of stocks involving real estate property, shall not exceed ten percent (10%) of the Investment Reserve Fund: Provided, finally, That investments in other income earning projects and investment secured by first mortgages and or other collaterals shall not exceed twenty-five percent (25%) of the-Investment Reserve Fund;

(h) In bonds, debentures, securities, promissory notes or other evidence of indebtedness of any prime corporation or multilateral institutions to finance domestic projects: Provided, That the issuing or assuming entity or its predecessors shall not have defaulted in the payment of interest on any of its securities and that during each of any three (3) including the last two (2) of the five (5) fiscal years next preceding the date of acquisition by the SSS of such bonds, debentures or other evidence of indebtedness, the net earnings of the issuing or assuming institution available for its fixed charges, as defined in this Act, shall have been not less than one and one-quarter times the total of its fixed charges for such year: Provided, further, That such investments shall not exceed forty percent (40%) of the Investment Reserve Fund;

(i) In preferred or common shares of stocks listed or to be listed in the stock exchange and other securities trading markets or options or warrants to such stock or, subject to prior approval of the BSP, such other risk management instruments of any prime or solvent corporation or financial institution created or existing under the laws of the Philippines with proven track record of profitability over the last three (3) years and payment of dividends at least once over the same period: Provided, That such investments shall not exceed forty percent (40%) of the Investment Reserve Fund;

(j) In domestic or foreign mutual funds in existence for at least three (3) years: Provided, That such investments shall not exceed forty percent (40%) of the Investment Reserve Fund: Provided, further, That investments in foreign mutual funds shall not exceed one percent (1%) of the Investment Reserve Fund in the first year which shall be increased by one percent (1%) for each succeeding year, but in no case shall it exceed fifteen percent (15%) of the Investment Reserve Fund;

(k) In foreign currency deposits or investment-grade rated foreign currency-denominated debts, prime and nonspeculative equities, and other BSP approved financial instruments or other assets issued in accordance with the existing laws of the countries where such financial instruments are issued: Provided, That these instruments or assets are listed in bourses of the respective countries where these instruments or assets are issued: Provided, further, That the issuing company has proven track record of profitability over the last three (3) years and payment of dividends at least once over the same period: Provided, finally, That such investments shall not exceed one percent (1%) of the Investment Reserve Fund in the first year which shall be increased by one percent (1%) for each succeeding year, but in no case shall it exceed fifteen percent (15%) of the Investment Reserve Fund;

(l) In loans secured by such collaterals like cash, pensions, government securities or guarantees of multilateral institutions including loans to pensioners: Provided, That such investments shall not exceed thirty percent (30%) of the Investment Reserve Fund; and

(m) In other BSP approved investment instruments with the same intrinsic quality as those enumerated in paragraphs (a) to (l) hereof, subject to the policies and guidelines which the Commission may formulate.

No portion of the Investment Reserve Fund or income thereof shall accrue to the general fund of the National Government or to any of its agencies or instrumentalities, including government-owned or -controlled corporations, except as may be allowed under this Act: Provided, That no portion of the Investment Reserve Fund shall be invested for any purpose or any instrument, institution or industry over and above the prescribed cumulative ceilings as follows:

60% in private securities

5% in housing

30% in real estate related investments

25% in short and medium-term member loans

30% in government financial institutions and corporations

15% in any particular industry

7.5% in foreign-currency denominated investments

5% in private-sponsored infrastructure projects without guarantee

5% private and government sponsored infrastructure projects with guarantee

5% in private and government sponsored infrastructure projects.