Value of GSIS foreign investments dropping; State workers’ pension funds now in peril?

The Government Service Insurance System‘s earlier assurances that its investments are not endangered in the midst of the global financial crisis have come under a dark cloud of doubt.

Inquirer.net reports today that the GSIS

may have incurred more losses due to the sharp decline in stock prices around the world in recent weeks, an examination of its portfolio of stock holdings revealed.

The “global property securities” held by the GSIS also showed marked drops in their values in the weeks following the GSIS declared profits from its overseas investments.

One particular investment — in Helsinki-listed Citycon OYJ — showed an 85-percent drop in its value since the GSIS began its foreign investment program. Other property investments, such as in Brazil’s BR Malls Participacoes SA and Singapore-based property fund Capitamall Reit, showed declines of over 50 percent.

No wonder that the GSIS initially refused to disclose the extent of its investments in the US (as if the funds are not imbued with public interest). It turned out later that GSIS has been playing around with $1-billion in state workers’ pension funds!

GSIS has previously denied that large exposures in US securities, and later boasted that whatever investments it has made, the pension funds even scored profits amid the crisis.

Now, the invested GSIS funds are losing value and state workers may have to suffer because of it.

Antonio Tinio, chair of the Alliance of Concerned Teachers, which includes public school teachers across the country, has said in a statement that:

[the] assurance that the GSIS “has taken every move” to ensure the success of the GIP, and specifically that it only deals with those fund managers with at least $100 billion in managed assets is meaningless, considering that the current meltdown in Wall Street shows that such assets can evaporate overnight.

Tinio also pointed out that while a GSIS official has “seen fit to mention that $300 million of the GSIS’s funds are being managed by ING Investment Management and another $300 million by Credit Agricole Asset Management, she conveniently omits the fact that Citibank NA serves as the “global custodian” of the GIP, as announced by Garcia last November”.

“What are the risks posed to the pensions of members with the involvement of Citibank?” Tinio asked, stressing that with their “pensions on the line”, the GSIS owes them a full explanation.

Gabriela Rep. Liza Maza has asked the House to investigate the GSIS’s foreign investments, through House Resolution 333, but the House has not looked into it since Nov. 2007 when it was filed.  Yes, the date is correct, it was filed Nov. last year or months prior to the financial meltdown.

Maza reminded the House last week about HR 333 but no one seems to be paying attention.

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