The Social Security System (SSS), for many years now, has been working on a reform agenda that includes enhancing benefits without jeopardizing the sustainability of the pension fund; adjusting the rate of contribution to a more realistic level; and amending the SSS Charter to enable it to lengthen the fund life to perpetuity, among others.
The proposal in 2011 to raise the contribution rate by 0.6 percent to round off the 10.4 percent rate to 11, as well as to adjust the maximum salary subject to SSS contribution from P15,000 to P20,000, met stiff opposition, particularly from the employer sector. It took several years of dialogues and consultative meetings before the employer sector finally agreed to the 0.6-percent increase, but not to the P20,000 salary ceiling. Instead, the maximum salary was raised to P16,000, which, by today’s standard, is the entry-level salary in most companies.
The adjusted contribution rate, as well as the maximum salary subject to SSS contribution, took effect in January 2014, but not before the SSS went through a lot of flak after politicians rode on the issue. Instead of seriously studying the matter and looking at the data (gathered by the World Bank and other interested parties) on the viability of the state pension fund, legislators opted to take the populist route, probably in aid of election. Thus, instead of helping the SSS strengthen its financial standing, several bills were filed in Congress proposing to raise pensions without any care that the proposed measures will bankrupt the workers’ pension fund.
Now it’s time to take the bull by its horns. President Duterte’s economic managers—Finance Secretary Carlos G. Dominguez III, Socioeconomic Planning Secretary Ernesto M. Pernia and Budget Secretary Benjamin E. Diokno—are correct in saying that contributions must be raised by six percentage points to 17 percent and the salary ceiling to P20,000 to enable the pension fund to afford the pension increase of P2,000. They further said that calling on the sovereign guarantee should be the last resort.
This position is consistent with the SSS reform agenda. However, the agency is also cognizant of the needs of all stakeholders, including the employers. As Social Security Commission Chairman Amado D. Valdez said, while the agency welcomes the idea of raising the SSS contribution rate, “it should be implemented in stages, raising it by only 1.5 percent at a given time. As for the maximum monthly salary credit (MSC), we support increasing it to P20,000 to better reflect the present wages of SSS members, and enable them to save up more for their retirement.” He noted that increasing the 11-percent SSS
contribution rate and raising the P16,000 maximum MSC are just part of the various measures that the institution is considering to strengthen the fund’s capacity to absorb the impact of the P2,000 pension hike.
The SSC, led by Valdez, is urging SSS management to work on increasing the present rate of return on investments to 15 percent to 20 percent, from the current 6 percent, through innovative investments to bolster SSS income and give additional buffer for implementing the pension increase.
The SSS is looking at investing in infrastructure projects, such as toll roads and railways, under public-private partnerships, to provide the agency a stable and safe source of income that will be covered by government guarantees. These investments will also help spur economic development in the country.
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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.