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"The global financial markets are still in the downturn, leading to a more cautious approach towards investment allocation," he said.

Highly secured assets include government bonds and state enterprise bonds.

In 2009, SSO expects to receive cash inflow of Bt150 billion. This amount consists of approximately Bt100 billion, which is contributions from employers, employees and the government plus investment return, net of benefit and management expenses, and approximately Bt50 billion, which is matured securities to be reinvested.

Current yields of government securities despite the safest investment, are as low as 1 - 3 per cent, so the SSO expects investment income for 2009 to be flat, not much more than Bt24 billion gained in last year.

As of 31 December 2008, the Social Security Fund has total asset of Bt567.91 billion, the majority of which is actually set aside to cover pension benefits for more than 9.2 million private employees.

As much as 84 per cent of Bt567.91 billion portfolio is now invested in highly secured assets including government bonds, stateenterprise bonds guaranteed by the Ministry of Finance, bank deposit guaranteed by the FIDF, and investmentgrade corporate bonds. The remaining 16 per cent of the portfolio is invested in risky assets including other debt instruments, unit trusts (property funds and foreign investment funds), and equities.

For the year 2008, the fund has generated total investment income of Bt24.48 billion, up from Bt21.11 billion earned in 2007.

The fund records 9.40 per cent investment return (measured according to Accounting Standard No. 42 whereby all securities held are marked to market) for the year 2008, up from 8.71 per cent in 2007.

 "The positive return for 2008 amid global financial crisis was a result of a prudent investment policy," he said.

The asset allocation of the Social Security Fund must comply with the Social Security Committee Regulations on Investment of the Social Security Fund BE 2549 which stipulates that no less than 60 per cent of the fund must be invested in highly secured assets and no more than 40 per cent of the fund may be invested in risky assets.

The SSO is also looking to allocate another 5 - 10 per cent of cash in Thai equity, which is offering an attractive value, in 2009, he said.

The stock market nevertheless contain a downside risk and investors may have to wait until 2010 for a turnaround, said Win.

Looking forward, to ensure longterm viability of the old-age pension fund, the Social Security Committee has set up a new Subcommittee to study investment opportunities in foreign securities and other alternative asset classes.

The socalled "Alternative Investment" should offer higher riskadjusted returns, and low correlations with traditional asset classes, for longterm institutional investors.

However, these investments, such as private equity or real estate, can be very illiquid and complex in nature. Given the Committee's approval, the SSO must build more capacity, in terms of both human resources and technology, to best manage such complex asset classes.