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GPF considers high-risk investments

Jul 16. 2015
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By Sucheera Pinijparakarn

The

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THE GOVERNMENT Pension Fund is considering restructuring its investment portfolio by focusing on risky assets to deal with the younger members of the fund who can accept high risk with high returns, said Sombat Narawutthichai, secretary-general of the GPF

He said the average age of existing members was lower than in the past because around 240,000 of a total of 700,000 who were in the public service before 1997 left the pension fund under the Undo Act.

Under the act, those who had been members of the GPF before 1997 were given a chance to quit the fund and return to using the rights granted under the original civil-servant Pension Act of 1951.

Sombat said that the number of 240,000 is lower than the GPF target and the fund is expected to allocate money of Bt50 billion for paying them.

The biggest state pension fund with total assets of Bt754.78 billion, the GPF is considering new investment instruments and risky assets for investment including stocks, non-listed companies and property funds, he said.

Sombat said the GPF would hire fund managers overseas to help find the best investments likely to provide good long-term returns.

He said the volatility of equity markets and the downtrend of interest rates had affected investment returns this year, so it would not be easy for the pension fund to match the returns of 6.75 per cent it saw last year.

Retirement savings

The pension fund, which manages retirement savings for about 1.2 million state employees, should have investment returns 2.5-3 per cent above the local inflation rate and a fixed 12-month deposit, Sombat said.

The GPF has about 24 per cent of its assets in stocks, including 14 per cent in overseas stocks, some in China.

"The recent tumble of China’s stock markets did not affect us as we just started investing in Chinese stocks last year, and so far they have generated positive returns for us," Sombat said.

Our investment in Chinese stocks is valued at Bt3 billion to Bt4 billion, compared with our total investment portfolio of Bt520.85 billion," he said.

The fund’s major investment portfolio is the bond market, accounting for 60 per cent of the total.

About 10 per cent is invested in non-listed companies and 5 per cent in property assets, including property funds.

The GPF remains cautious on the Thai stock market because the domestic economy is in a period of slow growth, while the prolonged severe drought might have a further impact on gross domestic product.

The GPF yesterday signed a memorandum of understanding with three major life-insurance companies – AIA Thailand, Thai Life Insurance and Muang Thai Life Assurance – for renewal contracts allowing them to continue selling whole life-insurance programmes to GPF members at special premium rates.

Sombat said the GPF could handle savings for members, while life-insurance companies could offer better life protection, and the renewal contracts would help members get long-term protection with low premiums.

During the more than 10 years since the GPF began collaborating with insurers to offer whole life-insurance programmes, there have been around 900,000 policies written, creating premiums of Bt16 billion and an insured total of Bt160 billion.

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