June 26 (Bloomberg) -- Thailand’s Social Security Office, the nation’s biggest money manager, plans to double its investment staff as it adds international stocks for the first time to boost returns.
The SSO, which manages about 1.1 trillion baht ($34 billion) of pension contributions for local workers, aims to increase holdings of international stocks to 12 percent of assets in five years, Win Phromphaet, the head of investment, said in an interview today. SSO will double the number of staff in its investment division to about 100 by 2015 and may open offices in global financial centers, he said.
The pension fund is seeking higher returns abroad after valuations of local shares rose to a one-year high, government bond yields fell below their 10-year average and projections showed the number of pensioners receiving benefits will jump about 80-fold in the next 10 years. SSO also plans to double its holdings of real estate, commodities and alternative investments to boost annual returns to about 5.5 percent from 4.5 percent.
“Our current assets generate such low returns that it exposes us to major survival risk,” Win, 37, said in an interview at his office in Bangkok. “The benefits for retiring pensioners will surge to such a level that we have an urgent need to boost income from some other risky assets.”
Prices for Thai stocks and bonds have climbed this year even as the economy contracted in the first quarter and the nation’s army took power in the 12th military coup since 1932. The rally pushed down yields on 10-year government notes to 3.82 percent, versus an average 4.17 percent during the past decade, according to data compiled by Bloomberg. The benchmark SET Index of stocks is valued at 13.5 times estimated earnings, the highest level since June 2013.
SSO, which was established in 1990 to provide health-care benefits and expanded into pension welfare eight years later, currently invests 85 percent of its assets in local bonds.