The International Labor Organization (ILO) today presented an analysis of the institutional situation, governance and investment management of the Bank of the Ecuadorian Institute of Social Security (Biess), in which some problems have been found in the field of coordination between IESS and Biessthe structure of the directory, lack of information and little neatness in the collection.
The organization indicates that it has been detected “important challenges and areas for improvement” for the entity that manages the money of IESS members. The results are part of the technical assistance program that the ILO had provided to the IESS since 2018.
The ILO recommends establishing a preponderant role for the IESS, in terms of exercising active ownership over the bank. Proposes that the regulations establish a coordination between the IESS and the Biess, “especially to facilitate the analysis and evaluation of the sustainability of the funds of social security that the IESS must carry out as part of its mandate”.
The study also proposes the review of the structure of the Biess Board of Directors to strengthen its independence in the face of political cycles and guarantee proper accountability, sufficient availability of resources and the necessary expertise to carry out its functions. The ILO proposes reviewing the structure of the Biess’s main governing body to “ensure that investments of social security resources are made in the best interest of affiliates and retirees.” There are currently two Government delegates: the president of the IESS who presides over the Board of Directors and a delegate from the Ministry of Economy. In addition, there is a delegate from the affiliates and another from retirees.
In regards to the investment Managementthe study warns that the general principles and objectives of the investments of social security funds are not consolidated and prioritized within a single document .
In any case, December As of 2020, the Biess portfolio was made up of 41.6% in products fixed income in the public sector (debt securities of the Ministry of Economy and Finance and by the National Financial Corporation), 0.7% in private sector fixed income, 3.7% in variable income from the private sector, 3.5% was in available funds and 50.6% corresponded to loans granted. In the composition of the 2013 portfolio, loans only represented 42% of the total portfolio.
The study also highlights the importance of Biess being able to advance in expand the range of investment possibilities for the pension fund portfolio, in order to maximize its performance, maintaining appropriate risk levels.
The Risk management of the Bank was analyzed based on the guidelines of the International Social Security Association (ISSA) and areas for improvement were detected related to modernization that facilitates online information flows and easy availability for the different governing bodies.
On the subject of loans, the report highlights how delinquencies have been growing, especially in the area of mortgages. In 2015 the delinquency rate was 2.9% and then rose in the following year to 5.3%; however, for 2020, the year of the pandemic, the index was placed at 13%. The ILO highlights that apparently there are not enough incentives to carry out the necessary collection processes.
Regarding the principle of transparency, the study maintains that the statistical information on investment diversification, returns by type of instrument and investment policies available on the institutional website is limited, which makes it difficult for interested parties to assess compliance with the main mandate of Biess.
The analysis carried out by the ILO, and framed in the International Labor Standards, the guidelines issued by the ISSA and international good practices, was presented to the members of the Board of Directors of the BIESS and the authorities of the IESS, who expressed the importance of advancing in the implementation of the recommendations issued.
Source: Eluniverso
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