The Government Service Insurance System is reviewing a planned $400 million overseas investment because it has lost confidence in the health of global fund managers, its president said on Wednesday.

So far, the Philippines' biggest state pension fund by assets is pleased with last year's $600 million overseas investment, which lost less than one percent in value at end-2008 from April when the placement was made, Winston Garcia, president of the pension fund, told Reuters.

By contrast GSIS's domestic investments lost about 30 to 40 percent at end-2008 from a year earlier. It said low interest rates would likely depress its net income this year to 41 billion pesos ($862 million), down between 14.6 and 18 percent from 2008.

"We're timing it," Garcia said on the additional foreign investment.

"Because of the volatility of the situation, I don't think it is advisable for us to go through with it, although my instinct tells me now is the time to put in the money."

The pension fund is not ruling out the possibility the planned additional overseas placements may still take place before 2009 ends. GSIS originally wanted to complete its programmed $1 billion foreign investment late last year.

"We have to let the dusk settle," Garcia said. "We can never tell now the quality of ... fund managers, we are very much apprehensive."

"Let all the garbage come out first. Now that the garbage is coming out, we will know really who are severely affected by the crisis," Garcia, a lawyer by profession said. "We do not think it is prudent to deal with any fund manager in this kind of environment."

GSIS, with total assets of 480 billion pesos at the end of 2008 and with investible funds of more than 100 billion pesos, is sitting on a pile of cash which earns a pittance in domestic investments, Garcia said.

"We are also very concerned right now with our ballooning cash position," Garcia said. "We are really wracking our brains right now in looking for where we can park some of these funds in order to generate more returns for GSIS other than the usual interest income."

He said the pension fund is looking to buy state property assets which it can develop and sell later at a premium.

ING Investment Management and Credit Agricole Asset Management (Singapore) Ltd manage GSIS' existing overseas investments but are barred under their contract with the fund from participating in the second phase of its foreign investment program.