Statement from the Social Security Investment Fund

With reference to the article published in Al Ghad on 24/4/2018 under the lead headline "Remarks on the Social Security Investment Fund" and on page 28-A, and pursuant to the right of response, SSIF would like to clarify that:

1. We wish Al-Ghad had acquainted itself with the detailed explanatory notes that were published recently, which included a comprehensive overview of the Investment Fund’s mode of work and the principles of corporate governance that govern its work. These notes and explanations were developed pursuant to the principle of transparency and communication with the media in order to educate different segments of society. It is clear from the article that the writer was not familiar with these notes, which contain detailed information that answer much of what the article referred to.

2. The work of the Fund is governed by an integrated system of legislation and internal control systems in an integrated institutional framework based on the Social Security Law No. (1) of 2014 and the Social Security Investment Fund and Investment Board Bylaw No. 97 of 2014.

3. Based on the above, what governs the "asset allocation mechanism" and details thereof are specified in the Investment General Policy approved by the Board of Directors of the Social Security Corporation (SSC) based on the recommendation of the Investment Board, which includes the target strategic distribution and allocation of assets, type of investment, target ratio, and target range for each investment instrument. The SSC Board of Directors monitors compliance with the policy through the system of monthly and quarterly reports submitted by the Investment Board. All resolutions and minutes of meetings of the Investment Board are submitted and included on a monthly basis on the agenda of the SSC Board of Directors for their knowledge and discussion.

4. It is important to highlight that investment in government bonds in the local currency is a safe investment and many pension funds throughout the world invest in this asset class. It is considered less risky than any other investment and it has a guaranteed and rewarding return. International accounting rules affirm that credit risk due to investment in this instrument is zero. This was further confirmed by the Regulatory Capital Instructions issued by the Central Bank of Jordan on 31/10/2016, in accordance with Basel III Standard (No. 67/2016). For example, the bid-to-cover ratio of the last treasury bonds auction on 22/4/2018 reached 302%, which shows the increase in demand for investment in treasury bonds by the banking sector and the high competition on these issuances because they are a safe investment that carries a rewarding return.

5. The question whether to invest in different projects is considered on the basis of a study and recommendation by the relevant department in SSIF, then a study and recommendation of the Fund’s Investment Committee, and then the recommendation to the Investment Board regarding any investment opportunity, the Board being the party empowered to make the investment decision whether or not to make any investment. It would not be possible to undertake an uneconomic Investment according to the studies that are conducted and the target returns within the Investment General Policy. Sometimes, consideration of whether or not to make a certain investments of a specialized nature is postponed due to the lack of specialized human resources at the fund, and sometimes experts are consulted because one of the most important challenges facing the Fund is the issue of human resources. There is a shortage of human expertise in specialized investments with long experience at the fund, and the capacity to attract new competencies has been limited since the Fund was made subject to the civil service system in 2012. At this point the Fund would not fail to express its thanks to the distinguished Deputies for their support and understanding of the Fund's specificity and their recommendation on the need to boost the Fund with additional specialized competencies to stimulate its work in accordance with their recommendations during the Chamber of Deputies’ session on 17/4/2018.

6. Since the beginning of 2018, the Fund invited a number of advisors specialized in financial and administrative consulting through a tender to provide the necessary advice to restructure the framework of the Fund's work, including the strategic asset allocation, and to submit proposals for re-engineering its work procedures and detailed operations in accordance with international best practices used by pension funds throughout the world.

7. Yes you are right that the Fund's assets are on the increase and this is the truth. The truth is also that the Fund’s income is increasing. Income reached JD 359.7 million at the end of 2017 compared to JD 315.1 million at the end of 2016, an increase of 14%. Income as at 28/2/2018 was JD 60 million, compared to JD 43.3 million as of 28/2/2017, an increase of 39%.

Public Relations and Media Unit, Social Security Investment Fund