President Duterte recently approved the recommendation of the Social Security Commission (SSC) to increase Social Security System (SSS) pension benefits by P1,000 effective January 2017 and another P1,000 in 2022 or earlier. Finally, the long-awaited clamor of some 2.2 million pensioners will be realized.
The President, likewise, approved the increase of the contribution rate by 1.5 percent, from 11 percent to 12.5 percent, as well as the maximum salary subject to SSS contribution from P16,000 to P20,000, effective May 2017.
While the pensioners and majority of the SSS members expressed gladness at the benefit increase, there were those who questioned the rate hike as violative of the social-security law. The SSS management hastened to assure the public that there was no violation of the law, since the benefit increase will be financed by current contributions and investment income, while the contribution hike by May 2017 will be used to enlarge the Investment Reserve Fund, to generate higher yields for investments, and to further strengthen the viability of the pension fund for future obligations. As a social-security institution, the SSS is mandated to promote social justice by providing meaningful benefits to its members when they retire.
Since 1980, when the contribution rate was at 8.4 percent, the contribution rate was adjusted three times only: first in 2003 by one percentage point, then again in 2007 also by another one percentage point in both instances shouldered solely by the employer. The most recent adjustment was in 2014, by 0.6 percent, this time equally shared by the employer and employee at 0.3 percent each rounding off the contribution rate at the current 11 percent. Benefits, on the other hand, were raised 22 times from 1980 to 2014, leading to the reduction of the fund life from perpetuity to just 25 years today. To restore actuarial equilibrium, the SSS has adopted a reform agenda that includes the gradual raising of the contribution rate to around 17 percent, as well as the adjustment of the salary ceiling to more realistic level. The contribution rate adjustment, lately, has become a contentious issue primarily because it has become so politicized. Instead of it being a business decision meant to ensure the long-term viability of the pension fund and its capability to provide meaningful benefits, it has been sullied with politics.
Thankfully, this new Congress has seen fit to pass a House bill giving the SSS the sole authority to increase premium contributions. House Bill 2158 will amend the SSS law by authorizing its board to increase premium contributions without the approval of the president. If this bill becomes a law, it will surely help shield the pension fund from politics.
Now, looking at the matter with objective eyes, it is about time to raise the contribution rate. Compared with other social-security institutions around the world that started at about the same time as the SSS and with a similar scheme, their contribution rates are now way above 20 percent. Locally, the Government Service Insurance System (GSIS), which covers public-sector employees, has a rate of 21 percent, 9 percent being contributed by the employees and 12 percent by the government as employer, based on the worker’s actual salary. Hence, government workers’ pensions are relatively higher than private-sector workers since contributions were higher.
Thus, to have higher pensions, one must save more. One’s contributions to the SSS, after all, are not an expense but rather a form of forced savings, which at the end of one’s productive years, will be received back as pension benefits for life.
****
For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday.
Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.
1 comment