FGS PORTFOLIO

El Fondo de Garantía de Sustentabilidad del
Sistema Integrado Previsional Argentino
Argentine Public Pension Fund
Recent social security history
1993
2007
September
June
Creation of Private Fully Funded Scheme
(co-exist with a Public Pay-As-You-Go Regime)
Creation of the FGS
Number 1
2008
October
A flexible scheme to update the
pensions is implemented:
• Two increases per year (March
and September)
November
The congress passed SIPA law:
Complete Amendment of the Pension
Fund system.
•The two regimens were unified into a
unique public PAYG regime
•Creation of FGS: FGS 1+ Private Funds
2
Argentine Private Fully Funded Scheme
 People without jobs or unregistered workers didn’t have access to the social
security system.
During the ’90s, from 10 new job
positions that were created, 9 where
unregistered jobs (without paying the
applicable taxes and contributions).
Nowadays this relation has been
inverted, from 10 new job positions, 9
are registered ones.
‘90s
Present
This allows more retired workers to
benefit from the pension funds system.
3
Argentine Current PAYG Scheme
 The Argentine Constitution establishes in Section 14 that the State shall grant
the social security benefits in a complete and non-transferable manner.
$
$
The Argentine pension fund system
is inter-generational, i.e., active
workers support the current
beneficiaries of the social security
system (retired workers).
Does not charge any fees for the
funds management. AFJPs did.
How does the system support itself? How does ANSES manage the
funds?
4
SIPA funding sources
All people contribute to the social security system
Social security taxes
56%
General Taxes
44%
Everyone is
benefited
from the
social
security
system
5
Pension fund system beneficiaries
Argentine minimum pension
Pension coverage rate
Increased of more than 5 times in eleven years
-December 2011100%
96%
87%
90%
89%
88%
80%
70%
508%
60%
50%
40%
30%
20%
19%
Colombia
Mexico
20%
18%
10%
0%
Argetina
Brazil
Chile
Paraguay Uruguay
2003
2014
The current pension coverage rate is the highest in Latin America
2005 Pension Moratorium allowed ANSES to grant 2,3 million of new benefits
6
FGS role in the Argentine Pension System
Investment revenues
Financial investments
Financial System
Capital Market
Surplus
Eventual
Deficit
• Pensions
Social Security taxes
56%
General Taxes
44%
• Family wages
• Universal Child
Allowance
• Subsidies
• Unemployment
Subsidies
7
FGS main purposes
1.
To contribute in the sustainable development of the economy.
2.
To ease the financial impact on the pension system that could be
exercised by negative economic and social factors.
3.
To act as a reserve fund composed with the surplus of the
Argentine pension system in order to develop an appropriate
investment of the surplus of the Argentine pension funds system.
4.
To keep the value and profit of the FGS’s assets.
5.
To solve eventual deficits of the Argentine pension system in
order to assure the integrity of the pensions.
8
FGS control structure
Fifth level
Fourth Level
Third Level
Second level
Internal
control within
ANSES
First level
Dirección
Internal
de Auditoría
control within del FGS
the FGS
Dirección de
Control del FGS
Sindicatura
General de la
Nación and
Auditoría
General de la
Nación
External
governmental
agencies
FGS Council
(Consejo del
FGS)
Formed by
representatives of:
Workers
Retired workers
Companies
Legislative Power
Chief of Ministers
ANSES
Comisión
Bicameral de
Control de
los Fondos de
la Seguridad
Social
Special commission
formed by
members of the
Legislative Power,
which controls the
investments and
evolution of the
stock of the FGS.
9
Virtuous circle with economic and social effects
ECONOMIC
Increase of Pension
Funds
SOCIAL
Increase of
investments
• More money in the FGS
implies better pensions
in the near future
• More investments
Profitability
Increase of
tax collection
due to workers’
and employers’
contributions
POLITIC
Greater
tax
collection
Greater level
of registered
workers
• More work positions and
and greater consumer
demand
Commitment of
social security
savings
as well as
Argentina’s
development
• More national and local
tax collection
10
FGS Portfolio variation in USD as of 12.31.14
FGS Variation between 12/05/08 – 12/31/14
(USD billions and %)
12/5/08
USD 28.4 Bn
12/31/14
USD 55.2 Bn
_____________________________
Variation
+ USD 26.8 Bn
+ 94%
11
FGS Portfolio variation in ARS as of 12.31.14
FGS Variation between 12/05/08 – 12/31/14
(ARS billions and %)
12/5/08
ARS 98.1 Bn
12/31/14
ARS 472.3 Bn
_____________________________
Variation
+ $ 374.2 Bn
+ 382%
12
Growth of FGS in dollars since its beginning
Annual growth rate in dollars of 11,5% cumulative
(dec-2008 a dec-2014)
(USD millions and %)
Monthly evolution of FGS portfolio
Millions
USD
u$s 55.223
millions
60.000
Growth:
+94,2%
55.000
50.000
45.000
40.000
35.000
30.000
USD 28.440
millions
25.000
Dec-14
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
20.000
13
Growth of FGS in pesos since its beginning.
Annual growth rate in pesos of 29,5% cumulative (dec-2008 a
dec-2014)
(ARS millions and %)
Monthly evolution of FGS portfolio
Millions $
$ 472.265
millions
540.000
490.000
Growth:
+381,5%
440.000
390.000
340.000
43,3% anual
(dec-13/dec-14)
290.000
240.000
190.000
140.000
$ 98.083
millions
Dec-14
May-14
Oct-13
Apr-13
Sep-12
Mar-12
Aug-11
Feb-11
Jul-10
Jan-10
Jun-09
Dec-08
90.000
14
Asset allocation comparison
Stocks as of 12/05/2008
OTHERS
12,7%
FOREIGN
ASSETS
5,6%
PUBLIC DEBT
58,4%
CASH
5,7%
STOCKS
8,3%
TERM DEPOSIT
9,3%
FORMER Private Funds ( AFJPs)
PORTFOLIO
$ 28.4 Billions
Highlights:
• AFJP invested in foreign assets.
• Minimum investments in public work and
infrastructure projects.
Stock as of 12/31/2014
SECTION Q
12,33%
OTHERS
8,0%
PUBLIC DEBT
64,9%
CASH
1,1%
STOCKS
11,0%
FGS PORTFOLIO:
$ 55.2 Billions
TERM
DEPOSIT
6,1%
Highlights:
• Strong investments in public work and
infrastructure projects
• Repatriation of foreign investments
15
Increase in the Productive Sector (section Q)
Million
USD
Evolution and composition by sector
8.000
INFRASTRUCTURE
7.000
ENERGY
6.000
REAL STATE
5.000
AUTOPARTS
4.000
3.000
2.000
1.000
0
dic-10
jun-11
dic-11
jun-12
dic-12
jun-13
dic-13
jun-14
dic-14
FGS assets are invested in various operations which
enable the development of domestic capital markets
and the financing of productive projects and
infrastructure.
16
FGS investments in Energy Sector
Participation of ANSES in the sector
•
The Energy Sector is the main destination of ANSES’s investments adding up to
46% of the total amount ($ 3.2 billions).
•
The FGS-ANSES has become the main investor in the energy sector in Argentina.
Taking into account the six major energy projects: Atucha II, EPEC, MBT, Barragán,
Brigadier Lopez, Loma La Lata, etc.
•
These projects have a generating capacity of 3827 megawatts of energy. That is,
the FGS-ANSES currently funds 20% of total energy supply of the country. Thus,
one of five megawatts generated is financed by the FGS-ANSES.
17
Public work and Infrastructure Projects - ENERGY
ATUCHA II
Purpose: Finacing construction work, completion and start up of the nuclear plant
Central Nuclear Atucha II (745 MW/h).
Total Investment U$S 2.064,3 Mill.
(Valuation Dec-2014: U$S 1.677,7 millions)
Maturity: 12 years
Cupon: Libor + 500
ECONOMIC IMPACT
• Employment: In construction stage, 5,056 jobs (1st year) + 4,100 (2nd year).
In operation stage, 350 jobs.
• “Clean” energy production. Cheaper than its substitutes.
• Gradual increase in the autonomy of the Nation in the energy field.
• Increased tax revenues and foreing currency savings for less imports.
18
Infrastructure Projects - ENERGY
ENARSA – Thermoelectric Power Plants
Purpose: Finacing construction work, completion and start up, operation
supervision and maintenance of the plants.
Barragán: U$S 685,9 Mill. (Val. Dec-2014: U$S 638,2 mill.)
Brigadier López: U$S 347,9 Mill. (Val Dec-2014: U$S 310,1 mill.)
• Cupon: Fix 9,5% (Short term - 5 years)
LIBOR + 500 (Long Term – 12 years)
ECONOMIC IMPACT
• Employment : 550-650 monthly jobs in construction stage (both plants)
84 monthly jobs in operation stage (42 each plant).
• Generation: Barragán:
588 MW (open-cycle); 840 MW (closed-cycle).
Brig. López: 280 MW a (open-cycle); 420 MW a (closed-cycle).
• Taxes and revenues to ANSES: US$ 113,8 M (both plants).
19
Infrastructure Projects – ROAD WORKS
SISVIAL – Financial Trust
Purpose: project planning, construction works, maintenance, and road infrastructure
services, maintenance of road and railway infrastructure in rural areas, among others.
Total Investment U$S 954,3 Mill.
(Valuation Dec-2014: U$S 422,5 millions)
Maturity: Up to 12 years
Cupon: Badlar + (400 / 550 bp.)
National Highway #9
ECONOMIC IMPACT
National Highway #14
• Employment: 175.500 jobs (94.952 direct jobs, 24.634 jobs related to suppliers and
56.184 jobs related to induced consumption).
• Earnings to ANSES: US$ 270 M (7% of the investment).
20
Productive Sector – Real State
PRO.CRE.AR.
A national government initiative that projects providing 400,000 mortgage loans for
housing, the first 100,000 by the end of 2014. The aim is to encourage construction
by enabling recipients to build their own homes or purchase new homes built
through the program.
Total Investment made by the FGS in 2014:
U$S 1.637 Mill.
PRO.CRE.AR is a public financial trust
ECONOMIC IMPACT
• Investment in construction sector has a high multiplier effect on economic activity,
increasing the total output of the economy. It also generates a significant employment
growth through direct mechanisms, promoting such a labor-intensive branch, and
indirect: creating additional demand for products and services from suppliers and
consumption generated by increasing society´s income
21
Example: Legal requirements for investments in section Q
• Offering Prospectus
• Credit Rating issued by authorized agency.
• Periodic filing of financial statements audited by the Argentine SEC
Example: Financial Trust NA-SA
CAMMESA
CASH
FLOW
Supply
Contract
$
NACIÓN FIDEICOMISO S.A.
Financial Trust
$
Notes
Payments before
Bonds repayment:
• Taxes.
• Fees, other expenses.
BONDHOLDERS
(FGS)
22
Evolution of the Public Debt stock in the Portfolio
% of public debt on the FGS' portfolio
Composition performance
(Dec - 2014)
Pesos-Badlar
30%
68%
65%
Other
1%
Dec-09
62,0%
Dec-14
64,9%
62%
59%
USD-Fixed
42%
Pesos-CER
27%
56%
53%
50%
dic-09 jun-10 dic-10 jun-11 dic-11 jun-12 dic-12 jun-13 dic-13 jun-14 dic-14
According to the composition by type of yield, the portfolio registers greater
participation of USD-Fixed.
23
FGS Trading Desk
Policy of Transparency
The FGS Trading Desk under the Manager of Transactions and Operations has the following
resources:
• ELECTRONIC
RESTRICTED ACCESS: System of access to the Trading Desk by magnetic cards of exclusive use of
traders, managers and the FGS subdirector.
• GRINDED WINDOWS: Windows with treatment aimed to secure privacity
and protect information.
•3
BLOOMBERG TERMINALS: 3 workstations with Real-time Financial Information, 2 of them located at the
Trading Desk and the other in the Manager of Transactions and Operation office.
• 8 WORKSTATIONS: 8 workstations, each of them equipped
with 1 PC and 4 screens.
•8
CONSOLES AND RECORDERS “ETRALI MACH 3”: 8 telephone consoles with permanent recording
communication system, PtP technology and touchscreen.
• 4 TV SCREENS: 4 cable
• REUTERS
TV screens to provide online information.
SERVICE: A post for each operator, which provides real time information on prices of many financial
assets.
• BOLSAR SERVICE: A post for each operator, which provides real time information on prices of many local
financial assets.
• Currently, the FGS has a system of recording transactions and is in the process of contracting with various
counterparts the placement of PtP lines.
24
Transparency policies - Information
• Since December 2009, the FGS has an internet site that can be accessed
through the ANSES web site (www.anses.gov.ar). In this site the visitors
can download quarterly reports of the FGS portfolio evolution, all the
presentations made to the Bicameral Commision of Fund’s Control,
complete and updated listing of the investments made by the Fund and the
investment criteria. Also, it can be consulted the information related to the
FGS Control Agencies.
• In addition, since December 2009 the FGS publishes the evolution on
its portfolio with dissagregated data on the composition of
investment, global variations and items. Since this information is public,
the data is broadly distributed by the national and international press.
25
IMPLEMENTATION OF SAP (SYSTEMS, APPLICATIONS AND
PRODUCTS)
This prestigious and well-known operative system has been implemented as a support of
the accounting registry system of day-to-day-operations.
Its application to the FGS impacts on a positive way to the institutional image and brings
transparency to the management of the FGS’s assets; it also works as a useful tool to the
investment decision process of the different areas of the FGS.
SAP implementation was started in 2009 and the system was finally set up in June, 2010.
SAP implementation required an intensive tailoring of the standard version due to the
special characteristics of the FGS.
The stage of stabilization and final implementation in real time ended early this year.
Nowadays, FGS’s Trading Desk, Back Office area and the accounting registry area are using
SAP.
It has intensely emphasized the delimitation of the staff roles in order to avoid conflicts in
daily tasks and consistency mistakes.
We are working now in the expansion stage of SAP, adding new functions and extending its
application to other areas of the FGS.
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El Fondo de Garantía de Sustentabilidad en el
Sistema Integrado Previsional Argentino
Argentine Public Pension Fund