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13fh CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
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FIRST REGULAR SESSION 
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SENATE 
'04 JUL -6 All 39 
SENATE BILL NO. 
l8Ez 
INTRODUCED BY HONORABLE RALPH G. RECTO 
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EXPLA NA TO2 Y NOTE 
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system. 
This bill seeks to rationalize the investment operations of the Social Security 
System ( S S S )  as effective social welfare legislation. In modifying the cumulative 
investment ceilings of the system, it is empowered to invest more in viable undertakings 
thereby reaping more benefits in favor of tqe system's contributing members. 
The.increase of 10% in the housing investment will translate to houses for the 
moTe decent housing facilities. The 10% increase in the short and medium- 
term mem6er loans will give financial flexibility to members and the 5% increase in 
industry investment will also facilitate liquidity. More so, the 12.5% increase in the 
foreign-currency denominated investments will liberalize the investing capacity of the 
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The decrease of 15% in the investment to private securities and 10% in 
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government financial institutions and corporations and 10% decrease in the infrastructure 
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projects will limit high risk investments and prevents grants of behest and favored loans. 
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Through modifying the allowed portion of the Investment Reserve Fund, the 
I members are assured of sound management practices and sustained operations and more 
I effective delivery of social security benefits to its members. 
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13TH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
First Regular Session 
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S E N A T E  
S. BlLLNO. 
‘04 JUL -6 All 3 9  
Introduced by SENATOR RALPH G. RECTO 
AN ACT 
RATIONALIZING THE INVESTMENT RESERVE FUNDS OF SOCIAL 
SECUTIRY SYSTEMS, THEREBY AMENDING SECTION 26 OF RA 
8282 
OTHERWISE KNOWN SOCIAL SECURITY ACT OF 1997, AND FOR OTHER 
PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congvess assembled: 
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SECTION 1. SEC. 26 of RA 8282, otherwise known as Social Security Act of 
1997, is hereby amended to read as follows: 
“Sec 26. Investment of Reserve Funds - All revenues of the SSS that are 
not needed to meet the curkent 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 still, care, 
prudence and diligence necessary under the circumstances then prevailing that a 
prudent man acting in like capacity and familiar with such matters would exercise 
in the conduct of an enterprise of a like character and with similar aims. Pursuant 
thereto, and in line with the basic principles of safety, good yield and liquidity, 
the Commission shall invest the funds to earn an annual income not less than the 
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average rates of treasury bills or any other acceptable market yield indicator in 
any or all of the following: 
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“(a) 
x x x 
“(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] TWENTY percent ([3]20%) of the 
Investment Reserve Fund; 
“(c) 
In bonds, securities, promissory notes or other evidence of 
indebtedness o f  government financial institutions or government corporations 
with acceptable credit or guarantee: Provided, That such investments shall not 
exceed [thirty] TWENTY percent ([3]20%) of the Investment Reserved Fund; 
“(d) 
hi bonds, securities, deposits, promissory notes or other evidence 
of indebtedness of any bank doing business in the Philippines, including schools, 
hospitals, small-and-medium scale industries, cooperatives and non-governmental 
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, hrther, That said bank shall first have been 
designated as a depository for this purpose by the Monetary Board of the Bangko 
Sentral ng Pilipinas: Provided, finally, That such investments shall not exceed 
[forty] TWENTY percent ([4]20%) of the Investment Reserve Fund; 
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“(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 loans to members such as salary, educational, 
livrlihood, marital, calamity, and emergency loans: Provided, That not more than 
[thirty] FORTY five percent ([3]45%) of the Investment Reserve Fund at any time 
shall be invested for housing purposes: Provided, further, That not more than 
[ten] TWENTY percent ([1]20%) of the Investment Reserve Fund shall be 
invested in short and medium term loans; 
‘‘(9 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] TWENTY 
percent ([1]20%) of the Investment Reserve Fund; 
“(g) 
x x x 
“(h) 
In bonds, debentures, securities, promissoIy notes or other 
evidence of indebtedness of any prime corporation or multilateral institution 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 
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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 
[thirty] FIFTEEN percent ([30]15%) of the Investment Reserve Fund; 
“(i) 
In preferred or common shares of stocks listed or about to be listed 
in the stock exchange or options or warrants to such stocks or, subject to prior 
approval of the Bangko Sentrul ng Pilipinas, 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 [thirty] FIFTEEN 
percent ([30]15%) of the Investment Reserve Fund; 
“0) 
In domestic or foreign mutual funds in existence or at least three 
(3) years and payment of dividends at least once over the same period: Provided, 
that such investments shall not exceed twenty percent (20%) of the Investment 
Reserve Fund: Provided, further, That investments in foreign mutual funds shall 
not exceed [one] TEN 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 [seven and one-half] TWENTY percent ([7.5]20%) of 
the Investment Reserve Fund; 
“(k) 
In foreign currency deposits or triple “A” foreign currency- 
denominated debts, prime and non-speculative equities, and other Bangko Sentrul 
ng Pilipinas approved financial instruments or other assets issued in accordance 
with 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, farther, That the 
issuing company has proven track record of profitability over the last three (3) 
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years and a record of regular dividend pay-out over the same period Provided, 
jinally, That such investments shall not exceed [one] TEN percent (10%) 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 [seven and one-half 
percent] TWENTY ([7.5]20%) of theinvestment Reserve Fund; 
“(1) 
x x x 
“(m) In other Bangko Sentral ng Pilipinas approved investment 
instruments with the same intrinsic quality as those enumerated in 
paragraphs (a) to (1) 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 in any instrument, institution or industry over 
and above the prescribed cumulative ceilings as follows: 
[40%] 25% in private securities 
[35%] 45% in housing 
[30%) in real estate related investments 
[lo%] 20% in short and medium-term member loans 
[30%] 20% in government financial institutions and corporations 
[30%] 20% in infrastructure projects 
[15%] 20% in any particular industry 
[7.5%] 20% in foreign-cwrency denominated investments 
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SEC. 2.Implementing Rules and Regulations. - The Department of Finance 
(DoF) and other appropriate government agencies shall promulgate d e s  and 
regulations necessary for the effective implementation of this Act. 
SEC. 3. 
Repealing Clause. - All other laws, decrees, orders, issuances 
and rules and regulations or parts thereof inconsistent with this Act are hereby 
amended or repealed accordingly. 
SEC.4. 
The provisions of this Act are hereby 
declared to be separable and, in the event any of such provisions is declared 
unconstitutional, the order provision which is not affected thereby shall remain in 
full force and effect. 
SEC.5. 
Separability Clause. - 
Effectivity. - This Act shall take effect fifteen (15) days after its 
complete publication in at least two (2) newspapers of general circulation. 
Approved, 
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