Social Security investments record MOP8b loss in 2022
The Social Security Fund (FSS) lost nearly MOP8 billion in investments and currency exchange last year, pushing its gross expenditure to MOP14 billion, a leap of 144.87% year-over-year.
To justify its poor performance, the FSS has blamed the Russia/Ukraine war, European and US sanctions on Russia that have subsequently impacted the supply chain, global inflation, US interest rate hikes, drops in global stock and debt markets, as well as other financial factors.
According to its annual report, the FSS recorded major losses in its investments last year. This is despite complying with cautious and steady principles.
Numerically, the fund has total assets amounting to about MOP85.8 billion. MOP43.9 billion are in time deposits and the other MOP41.9 billion are in investments in global financial markets.
Its time deposits have yielded about MOP638 million in returns. However, the fund lost about MOP7.8 billion in its financial investments, after deducting fund management fees.
Last year, the total investment loss of the fund was about MOP7.2 billion. Calculated according to the proportion of fixed deposits and financial investment funds, the average return on investment (ROI) rate last year was about -7.46%, in contrast to 5.92% in the previous year, which is a significant drop.
Looking back over the past five years, the overall investment has still made a profit of about MOP10.8 billion. The five-year average annualized rate of return is 2.58%.
Last year, the income of the fund was about MOP2.8 billion, a drop of 71.18% year-over-year. The main source of income is government funding, including gaming appropriation, the 1% common sharing and 3% appropriation of the central budget execution balance. The total income of the above three appropriations was about MOP1.2 billion, accounting for about 43.57% of total annual revenue.
Interest and dividend income totaled about MOP885.5 million, accounting for 31.4% of the total annual income. The contribution income of the social security system was about MOP378.29 million, and the annual external employment fee (income) was about MOP320.31 million. The two income items together accounted for about a quarter of the total annual income last year.
The fund recorded about MOP13.95 billion in expenditure, with MOP5.67 billion having gone to social security payments and social subsidies. The rest was accounted to loss in investments and currency exchange.
The fund also noted that last year had seen a leap in the number of applications for unemployment subsidy due to a couple of lengthy lockdowns and lack of tourism activities.
