The bill to create the Maharlika Wealth Fund (MWF) would have run into legal problems if lawmakers had clinched their teeth at including the contribution of pension funds in the initiative, organized labor reflected.
In a statement, the Nagkaisa union coalition said while Social Security System (SSS) officials publicly supported the MWF, their members had reportedly not been consulted on the matter.
“As members of the SSS, our members strongly oppose the use of the £50 billion funds for the MWF. The Use Obligation [such amount] for the MWF [did not undergo] Consultation among SSS members. Their consent was not granted either,” said Nagkaisa.
Under House Bill (HB) 6398, the SSS, Government Service Insurance System (GSIS), Land Bank of the Philippines, Development Bank of the Philippines and the national government must invest equity totaling P270 billion to start the MWF.
Modeled after other countries’ sovereign wealth funds, the MMF is used by the government to invest in initiatives that promote fiscal stability and strengthen top-performing sovereign financial institutions.
Nagkaisa cited the Supreme Court decision in the case “Roman Catholic Archbishop of Manila v. SSS” (GR 15045, December 20, 1961). The High Tribunal ruled that “the funds brought into the scheme created by the Act are not public funds, but funds belonging to the members and held solely in trust by the Government.”
It also noted that while Republic Act (RA) 11199 (Social Security Act of 2018) allowed the SSS to use its reserve fund — its revenue not needed to cover its ongoing administrative and operating expenses — it did its mandated contribution of $50 billion P might invest to MWF is too much.
“The SSS is allowed to invest 1 percent of the reserve fund in foreign investment in the first year, which can be increased by another 1 percent for each subsequent year, up to a maximum of 15 percent of the reserve fund,” Nagkaisa said.
“The P50B crossed the one percent investment barrier. Based on the SSS figures at the end of 2021, the SSS may initially invest about Ps6 billion in foreign currency-denominated assets only in 2022, growing by about Ps6 billion annually,” it added.
The coalition hailed last Wednesday’s Congress decision to remove the provision of HB 6398 that would have mandated the SSS and GSIS to contribute to MWF, after it drew opposition from various sectors, including business and labor.
“We are delighted and the Nagkaisa Labor Coalition – the largest coalition of unions, federations, federations and alliances in the country – welcomes the removal of SSS and GSIS funds from the proposed Maharlika Wealth Fund Bill,” it said.
Nagkaisa consists of 47 working groups including the Federation of Free Workers, Partido Manggagawa, Sentro ng Nagkakaisa at Progresibong Manggagawa and the Trade Union Congress of the Philippines.