The social security reserve pays out a pension account of 23 billion euros over a year and a half, which corresponds to 11% of the annual gross domestic product.

The Social Security Financial Stabilization Fund (FEFSS) has 23 billion euros, an amount that, in a no income scenario, would be enough to pay pensions for a year and a half.

That figure corresponds to about 11% of Portugal’s annual gross domestic product (GDP) and “about a year and a half of annual pension spending,” the foundation’s president, José Vidrago, said this Wednesday at a parliamentary hearing at the request of the PSD. FEFSS funds are allocated to the National Buildings Restoration Fund. “These appeals grew both due to accumulated transfers and due to the profitability of the DFSS itself,” he said, adding that the average annual return since 1989 is close to 5%, including for the last three years.

Vidrago said the majority of FEFSS’s assets, approximately 66%, are invested in “high-credit-quality public and private debt,” 22% in equities, less than 1% in real estate bonds, and the remainder around 11%. in liquidity instruments used “principally to manage the interest rate risk of the debt component”.

Of the total value of FEFSS, about 54% comes from cumulative transfers, and the rest, about 46%, comes from capitalizing those amounts over time.

Fund rethinks real estate investment
The Social Security Financial Stabilization Fund (FEFSS) invested in three sub-funds in 2019, but now, “given the evolution of market circumstances and as FEFSS strives to guarantee an adequate minimum return, the feasibility of supporting real estate investments is being considered and assessed”, the fund has proposed to the supervisory board to reassess the best strategy for each of these three sub-funds, including the possible sale on the market of a part of the objects.