July 28, 2021

The pension fund loses 24 million dollars by investing in Treasury bills

The pension fund loses 24 million dollars by investing in Treasury bills



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Social Security has dedicated all its financial assets from the Reserve Fund since last year, better known as the 'pension savings bank', to Spanish public debt investments with negative profitability, as reported by the Secretary of State for Social Security, Octavio Granado, on Tuesday.

During his appearance before the Toledo Pact Commission, to which he has gone to report on the financial status of the Reserve Fund on December 31, 2017, Granado has assured that, since the middle of last year, the fund "has located all its values ​​in negative profitability ».

This, explained the Secretary of State, is the result of a change of criteria in the management of the fund by the previous Government in January 2017, when it was decided to invest the entire allocation of the Reserve Fund in Treasury bills, buying public debt with a very short term public expiration. A criterion that, he added later, it is still maintained for the whole year 2018.

According to sources from the Social Security, the purchase of debt at a loss has meant a reduction in the resources of the 'pension piggy bank' of about 24 million euros. If in 2017 the Reserve Fund ended with 8,085.37 million euros, the latest data show a balance of 8,061.56 million.

Granado has not disputed that there are investments for which the Reserve Fund could lose money, since as a result of the policies of the European Central Bank (ECB), the deposits of the Administration and public agencies have negative returns, but he has questioned that part of the assets will not be dedicated to medium or long-term investments.

"Was it necessary to have the entire Reserve Fund invested in very short-term securities?", Asked Granado, who has declined to "judge" these decisions of the team of the former Minister of Employment and Social Security Fátima Báñez and, therefore, , they assume as such. In any case, he stressed that "the current Administration does not share in any way the criteria used by the previous Administration or its forecasts."

And is that this decision to allocate all the short-term values ​​responds, he explained, to the "uncertainty" about the availability of resources, because already this same month of May Social Security expected to draw, in an initial estimate, another 5 billion euros from the Reserve Fund to cover the system's deficit. "We are more optimistic," he said.

In this sense, he has advocated "making a more prudent policy" in the management of the 'pension fund' and retaking the modified duration criterion in order to have short-term investments, but also in the medium term.

"We are buying letters to receive a lower amount of money for which we pay. We have the money in current account from which we are withdrawing negative returns, "said the 'number two' of the Minister of Labor, Magdalena Valerio, who has lamented that" the situation is anything but flattering. "

In any case, he stressed that the money in the Reserve Fund has been used to pay pensions, and not to use other than the legally established, and therefore wanted to "strongly deny some hoaxes on social networks" on which the 'piggy bank' would have been used to pay off debt.


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