LAST week was an interesting one when we witnessed the Senate leadership warn against the possible bankruptcy of the Social Security System (SSS) should the P2,000 across-the-board increase in pensions proposed by House Bill 5842 be passed into law. This is a welcome development for the SSS when key lawmakers expressed support for preserving the long-term viability of the pension fund amid calls for the SSS to implement an across-the-board pension hike of P2,000 without clear provisions on the source of immediate funding for such an increase.
According to recent reports, Senate President Franklin M. Drilon and Minority Leader Juan Ponce Enrile both expressed concerns on the impact of the proposed P2,000 pension increase, which would shorten the SSS fund life to just 13 years from the present projection of until 2042 to only until 2029.
It should be emphasized that the SSS is not opposed to measures that will enhance monthly pensions and other benefits of members, as long as these would not compromise the SSS’s actuarial life. In fact, last year the SSS granted a 5-percent across-the-board increase in pensions,
covering all its 1.9 million pensioners effective June 2014. Continuing reforms seek to enable the system to effect more pension increases without putting the SSS fund life at risk.
The state-run institution is wary of steep benefit increases that in the past had shrunk the SSS fund life from perpetuity status—pertaining to a fund life of at least 70 years—to as low as 16 years, as reflected in the 1999 SSS actuarial valuation. Over the years, the SSS is bringing its fund life back to perpetuity.
International pension-fund standards dictate an ideal fund life of at least 70 years as a guarantee that workers paying social-security contributions today can look forward to benefits when they retire 30 or 40 years from now.
While the Social Security Law provides that the government would step in should there be shortfalls in benefit payments, it would be unwise to drive the fund closer to the possibility through drastic benefit increases that may ultimately transfer the social-security burden to taxpayers.
As succinctly put by Enrile, “The difference in the projected funds to projected benefits will increase from P1.6 trillion to P2.7 trillion, based on current valuations. Evidently, 2029 is a decade away. But the very delicate question that we must consider is how do we responsibly address the needs of our present constituents while protecting the welfare [of] generations?”
Clearly, there is a need to implement reforms that will make the SSS more responsive to the needs of its pensioners and members. Many of the reforms to strengthen the pension fund require congressional action. Hence, Congress should amend the SSS Charter to give the agency greater flexibility and ability to enhance benefits to members without jeopardizing its long-term viability.
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For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph.
Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send comments about this column to susiebugante.bmirror@gmail.com.
1 comment
The need for increasing the benefit for the entry level pension (P1,200) is obvious. Why focus on the P2,000 across the board increase rather than doing some creative adjustment/modification to wards addressing the obvious pauper level minimum pension. If political leaders plunders by the hundred of millions why can’t they see the appropriateness of increasing the P1,200 (plus 5%) minimum pension per month?