Conclusion
The journey from 2010 onward was a marked transformation for the Social Security System (SSS), and a major turnaround. In terms of reach, it has over 100 additional branches; in terms of membership base, there was an increase of 5 million; in terms of contribution collections, an annual growth rate of 8.4 percent; and in terms of financial performance, the SSS currently stands on stronger ground.
The solid financial performance of SSS for the last five years is evidenced by its rising net revenue. Since 2010, annual net revenue averaging at P35 billion has quadrupled, compared to the average net revenue of P8 billion during the previous decade from 2000 to 2009. This is primarily attributed to strengthened self-sufficiency.
In 2012 the SSS marked its first contribution surplus—a major feat that bespeaks of financial sustainability. It has not looked back since then, as each year highlighted the improved contribution collections surpassing all expenditures. Prior to 2012, the SSS had a contribution deficit; thus, investment income was used to cover the shortfall in contributions to help fund benefit payments and operating expenses.
The concerted effort of increased collections due to expanding membership and cost-efficiency in operating expenditures not only reversed the prolonged insufficiency, but even generated a surplus to augment the SSS Investment Reserve Fund.
Since 2010, the SSS intensified employer compliance and coverage of priority member-markets, such as manpower agencies, informal-sector workers, cooperative members and overseas Filipino workers. With over 100 additional offices nationwide and abroad, plus new payment outlets in popular malls, member-contribution remittance was made easier.
With four consecutive years of contribution surplus the SSS has affirmed its path to strengthened financial performance. With the consistent growth of the Philippine economy, the SSS was able to optimize investment returns from the emergence of a more robust but volatile financial markets. Historical return on investment of the investment portfolio has consistently exceeded the 10-year Treasury-bonds and other comparative investment benchmarks for the period 2010 to 2015.
Section 25 of Republic Act 8282 (Social Security law) limits SSS expenditures to “not more than 12 percent of the total yearly contributions plus 3 percent of other revenues.” Monitoring this expense ratio is essential for the SSS to be more cost-effective in its operations.
During the early years of the new millennium, the SSS exceeded its charter limit and even surpassed 100 percent. With the system’s determined focus on operating efficiency, operating expenses versus charter limit were brought down to 52 percent in 2015, from 69 percent in 2010.
This was accomplished through the prudent management of operating expenses—a key achievement despite substantial expenditures in infrastructure, manpower and increasing benefit payments along with higher transaction levels and higher membership base.
One notable program that generated savings to the SSS was the revival of the Annual Confirmation of Pensioners Program, a screening process that prevented pension payments to noneligible beneficiaries due to remarriage, recovery from total disability or member’s death.
Strategic initiatives and policy reforms implemented from 2011 to 2015 resulted in total assets increasing to P444 billion, from P298 billion in 2010, for a remarkable 50-percent increase. The notable growth of the system’s financial resources can be attributed to marketing efforts to increase contribution collections, and increased operating efficiency and judicious management of investment portfolio based on good governance principles.
For its financial statements in 2014, the SSS received its first unqualified opinion from the Commission on Audit since 2009. An unqualified opinion is issued when the independent auditor believes that the company’s financial statements are sound; that is, the statements are free from material findings. This unqualified opinion is the hallmark of improved confidence and an affirmation of a strengthened SSS.
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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.