DOF's Diokno: SSS, GSIS can still contribute to Maharlika Fund

State-run pension funds Social Security System (SSS) and Government Service Insurance System (GSIS), which were removed as mandatory contributors to the Maharlika Wealth Fund, can still invest in the proposed sovereign wealth fund should they seek higher yields for their investible funds or assets, Finance Secretary Benjamin Diokno said Friday.

On Wednesday, House appropriations panel senior vice chairperson Stella Quimbo, one of the authors of the Maharlika Wealth Fund bill, announced that GSIS and SSS were dropped as funding sources of the sovereign wealth fund due to the fears of pensioners.

Aside from GSIS and SSS, also removed from mandatory contributors to the sovereign wealth fund was the General Appropriations Act or the national budget law.

At a press briefing in Manila, Diokno clarified that while GSIS and SSS were excluded as mandatory contributors, this was “without prejudice for them to contribute later should their respective boards approve their contribution.”

“They are not mandated to contribute but if they are looking for higher returns, because right now most of their money is invested in Treasury bills [which] don’t earn that much… if they want higher returns, they can decide to contribute but that is up to the respective boards of SSS and GSIS,” the Finance chief said.

The initial funding for the Maharlika Wealth Fund, which seeks to grow surplus funds of state-run financial institutions through investments, could reach around P150 billion.

The House Committee on Appropriations adopted the amendments on the funding sources for the proposed sovereign wealth fund, which now mandates the Land Bank of the Philippines and the Development Bank of the Philippine to contribute P50 billion each to the Maharlika fund.

The Philippine Amusement and Gaming Corporation (PAGCOR) and other government-owned gaming operations shall also contribute at least 10% of their gross revenues.

Other government financial institutions and government-owned and -controlled corporations may be authorized to contribute to the fund based on their respective investment and risk management strategies.

Diokno, likewise, said the national government can also contribute as authorized by the General Appropriations Act or any supplemental appropriations.

Other sources of funding for the Maharlika fund include royalties, special assessments on national resources, as well as proceeds of privatization of government assets, the Finance chief said.

The creation of the Maharlika Wealth Fund is contained in House Bill No. 6398, filed by House Speaker Ferdinand Martin Romualdez, and Ilocos Norte 1st District Representative Ferdinand Alexander “Sandro” Marcos III, both relatives of President Ferdinand “Bongbong” Marcos Jr.

Other authors of the measure were House Majority Leader Manuel Jose Dalipe, Senior Deputy Majority Leader Ferdinand Alexander Marcos, Tingog party-list Representatives Yedda Marie Romualdez and Jude Acidre, and Marikina City Representative Stella Luz Quimbo.

Diokno earlier said the establishment of a Philippine sovereign wealth fund “has been the imprimatur of the President” and that an inter-agency committee composed of the Department of Finance (DOF), Department of Budget and Management (DBM), National Economic and Development Authority (NEDA), and government financial institutions (GFIs) prepared the bill, which was then filed in the House of Representatives.

The Maharlika Wealth Fund initially eyed P250 billion seed funding from state-run financial institutions and P25 billion from the National Treasury.

Of the P275 billion, P175 billion would have been sourced from the GSIS and SSS. This amount has earned flak from GSIS and SSS members, economists, and even business groups.

But the change of heart, according to Quimbo, showed that Congress was committed to addressing the public's concerns. — DVM, GMA Integrated News