By Dr. Rene E. Ofreneo
The national debate over the mechanics of how to implement the proposed additional P2,000 in the monthly pension received by the elderly members of the Social Security System (SSS) tends to ignore other glaring facts about the state of destitution affecting majority of the nation’s senior citizens.
According to the Coalition of Services of the Elderly (Cose), majority of the elderly are not enrolled in the SSS nor covered by the Government Social Insurance System (GSIS). Those excluded were not able to participate in the contributory insurance system run by the SSS and GSIS in their younger working years, simply because they had limited earnings and savings. They were either in the huge informal sector of the economy, where incomes are marginal and work generally unregulated, or were part of the army of short-term casual workers in the formal labor market, many of whom could not complete the 120 monthly contributions that the SSS requires for pension entitlement.
Per study by COSE, only 29 percent of the elderly population in 2016 were covered by the SSS, GSIS and other pension systems. Another 17 percent enjoyed a cash transfer of P500 a month as stipulated by RA 9994 of 2010, the law that mandates the government to provide “social pension” to the poorest or most indigent elderlies. The rest, or 54 percent, of those aged 60 and above, had no pension at all and were virtually dependent on their children or extended family.
Those who want to work even in their 60s or beyond the mandatory retirement age of 65 face difficult challenges: first, the labor market is generally selective in favor of those below 60; second, aging saps the capacity of the seniors to log long hours for continuous work; and, third, various ailments further weaken their ability to do productive work. Many end up doing “apostolic” work caring for grandchildren, or idle away their time sitting near the windows watching the world pass by, day by day.
Universal pension for all, universal social protection for all
THE majority of Filipino elderlies do not enjoy a life of dignity and productivity. This is why many SSS pensioners are angry over the low levels of pension (many receiving only between P1,000 and P3,000 a month) and the failure of the government to grant immediately the full pension increase of P2,000 monthly (instead of the staggered schedule of P1,000 this year and the other P1,000 in 2020). As to the “social pension” of P500 monthly, this paltry amount is a good pantawid for only a few days or purchasing a few medicines. There are also complaints about irregularities in the listing of those covered and the inefficiency of the system of determining the qualified indigents. As to those not covered by the SSS, GSIS and the social pension, “bahala na ang Diyos at pamilya [let’s leave it to God and family].”
It is against this background that Cose and other citizens’ organizations, such as the multi-sectoral coalition called Dignidad (Buhay na may Dignidad para sa Lahat), have been waging a campaign, not only for higher pension benefits for SSS members, but also for adequate social pension for all Filipino seniors, members or not of the SSS. According to Cose and Dignidad, a universal social pension is part of a universal “social floor” or social protection for all that the United Nations has been advocating for all member-states. In June 2012 the International Labor Conference issued the “Recommendation Concerning National Floors on Social Protection”, which provides guidance to members on the need to “(a) establish and maintain, as applicable, social-protection floors as a fundamental element of their national social-security systems; and (b) implement social-protection floors within strategies for the extension of social security that progressively ensure higher levels of social security to as many people as possible.” The recommendation enumerates the basic social-security guarantees for all that should comprise social-protection floors, namely:
“(a) access to a nationally defined set of goods and services, constituting essential health care, including maternity care, that meets the criteria of availability, accessibility, acceptability and quality;
“(b) basic income security for children, at least at a nationally defined minimum level, providing access to nutrition, education, care and any other necessary goods and services;
“(c) basic income security, at least at a nationally defined minimum level, for persons in active age who are unable to earn sufficient income, in particular in cases of sickness, unemployment, maternity and disability; and
“(d) basic income security, at least at a nationally defined minimum level, for older persons.” (underlining supplied)
Is a universal social pension affordable?
Has the government the means to finance a noncontributory universal social-pension system? In the welfare states of Scandinavia, the social pension or “basic pension” is state-funded and is given to all citizens and other nationals who have lived in Sweden, Denmark and Norway for a number of years. But the situation in Scandinavia and other developed welfare states is vastly different, budget-wise, compared to developing countries with a free-wheeling market economy like the Philippines.
A closer model for the Philippines would be Thailand, where those with access to formal social insurance constitute only 20 percent of the work force. Concerned about the poverty and destitution affecting the excluded elderlies (mostly in the informal sector), the Thai government instituted in the 1990s a tax-funded “old-age” pension for the indigent seniors, which is similar to the Philippines’s social-pension scheme of P500 a month for the poorest seniors.
However, the system of “targeting” the qualified beneficiaries for old-age pension was found to be too bureaucratic, inefficient, error-prone and discriminatory. Only a minority of informal and indigent elderly workers benefited from the system. This selective system was abandoned in 2009 in favor of a “universal social pension” for all Thai workers. The ensuing universal social pension of 1,000 baht (in 2012), or roughly P1,400 a month, has become a big social-protection pillar for the 30 million informal-sector workers who are not covered by the contributory social-security system. The universal social pension is credited for the sharp reduction of poverty among the Thai elderlies and the overall stability of Thai society and economy. Incidentally, Thailand is also the pioneer in the development of a universal health insurance scheme, which the Philippines, through its PhilHealth, and other Asian countries are trying to emulate.
So can the Philippines afford to “universalize” social pension? Aura Sevilla, project officer of Cose, and her advocacy partners from HelpAge International, Charles Knox-Vydmanov and Daniel Horn, wrote that this is doable. In an exhaustive research report, titled “The Feasibility of Universal Social Pension in the Philippines” (January 2017), the authors pointed out that the various simulation and estimation studies conducted by a team of Filipino and foreign economists and statisticians show that a universal social pension can reduce the poverty level among the elderlies by 1 percent to 3 percent depending on the benefit level. If a benefit level of P1,500 is given to those 60 and above, the overall cost for the Philippine government would be P144 billion, which would represent roughly 1 percent of the GDP and 5 percent of the national budget.
In the two-year study conducted by Sevilla et al., it was found out that pension matters for the ordinary pensioner and his/her family because the pension constitutes a third of the household income, although the level of benefit is extremely low for those receiving P500 a month of social pension. Of course, the situation for those not receiving any pension at all, more than 50 percent of the elderly population, is dire.
It is abundantly clear that the country’s policy-makers, both in the Executive and Legislative branches, need to take a more comprehensive view of how to handle the task of formulating appropriate pension policies for all Filipino citizens. The SSS-managed contributory system, established in 1954, needs a thorough review regarding its operations and probably even an overhaul. The simplistic tack of raising pensioner benefits by raising the premium contributions of younger members should indeed be questioned. There should be a rigorous assessment of the operations of the SSS and GSIS by benchmarking their performance with the other contributory systems in Asia and in the world.
So, why, in the first place, has a succession of well-paid SSS commissioners failed to do a similar feasibility study of the universal pension study done by Cose, and what have they done to ease the plight of lowly paid SSS pensioners?
On the other hand, Dignidad and Cose are raising a fundamental question: How can the government assist the excluded majority in the elderly population? The excluded include the following: the millions of informals, the “unpaid family workers”, the “housewives” and “househusbands” who do work at home but are classified by labor statisticians as “not working”, the millions of overseas Filipino workers, and the majority of those listed by the SSS as “members” and yet are excluded from the pension system because of their failure to complete the 120 monthly premium contributions.
Dignidad is right
“Instead of simply rejecting the clamor of aging SSS members and retirees for higher pension rates, the government should acknowledge the stark reality—the existing SSS pension and benefit system, which is woefully inadequate for the qualified SSS members, excludes the vast majority of the country’s work force, particularly those in the informal economy. The country needs an overhaul of the whole system of social protection so that all workers, SSS- and non-SSS-enrollees alike, especially the poor, unemployed and vulnerable, can have minimum social security in life and a sense of dignity as Filipino citizens.”
Dr. Ofreneo is a former dean of the University of the Philippines School of Labor and Industrial Relations. He has written extensively on Asean and Asia-Pacific labor and social issues.