THE move to defer the expected rate hike in Social Security System (SSS) premium contributions gained traction after two partylist lawmakers pushed late Tuesday for the passage of House Bill (HB) 8304.
House Deputy Speaker Eduardo C. Villanueva and Rep. Domingo C. Rivera of Cibac partylist filed HB 8304 to amend Republic Act 11199 or the Social Security Act of 2018.
The law mandates that employers’ and employees’ share to SSS contributions shall be increased to 8.5 percent and 4.5 percent, respectively―an increase of 0.5 percent from last year’s level in both employers and employees share.
HB 8304, meanwhile, seeks to defer the mandated increase this year. It also provides that increases in SSS rates as provided by the law shall be suspended in the event of a pandemic.
“The truth is that both laborers and employers suffered from the debilitating blow of the pandemic and, therefore, must be provided not only with necessary government assistance but also of needed reprieve from statutory salary deductions such as the SSS premium contribution,” Villanueva, House Deputy Speaker for Good Governance and Moral Uprightness, said.
“The deferment in SSS rate hike means undiminished level of disposable income for our Filipino workers and employers which will help them cope and survive these hard times,” the lawmaker added.
The bill includes even those who have managed to keep their jobs but suffered reduced pays as companies were forced to cut costs or downsize in order to keep afloat.
“We thus call on Congress to pass with dispatch this much-needed legislation so that millions of Filipino employers and employees can be given enough space for them to get fully back on their feet,” Villanueva said.
According to Rivera, HB 8304 “complements” the bill filed by Senator Joel Villanueva, Senate Bill (SB) 1965, last Monday.
“We want Congress to swiftly act on this concern, which is an appeal from various business and labor groups,” he said.
“By having counterpart measures being simultaneously deliberated in both chambers of Congress, we expect an expeditious passage of this measure which we believe is very much-needed by our fellow Filipinos who are grappling for survival amidst this pandemic,” Rivera added.
Hurt in long run
HOURS before HB 8304 was filed, SSS President and CEO Aurora C. Ignacio warned the deferment could hurt the long-term sustainability of their funds, especially since the pension fund manager expect to pay P231 billion worth of claims this year.
Ignacio spoke amid calls from lawmakers and labor groups for the SSS to delay raising its contribution rate as mandated by law.
“If that [SB 1965] will be passed into law and will be mandated by the President [to implement it], we will comply [with its provisions],” Ignacio said during an interview at a government-owned television station on Tuesday.
Ongoing trend
Because of the economic slowdown caused by Covid-19, many workers were displaced or suffered a reduction in their income prompting more of them to avail themselves of their SSS benefits.
From January to October 2020, the SSS disbursed a total of P159.47 billion in social security and employees’ compensation benefits to 3.56 million members and beneficiaries.
It also released loan benefits worth P58.03 billion for 3.20 million members as well as P3.17 billion for 69,813 retiree-pensioners from January to Nov.ember 2020.
Meanwhile, the SSS was able to collect lower contributions last year also because of the economic effects of the pandemic.
“SSS contribution collections from January to October 2020 totaled only P169.73 billion, or a decrease of 5.4 percent from the P179.34 billion collected in the same period last year [2019],” Ignacio said in a statement.
She said SSS was able to cope with the decline in its contribution though its “well-managed” investments.
The number of SSS members, who are availing of their benefits like calamity loans and unemployment benefits this year will be higher compared to that of 2020, according to Ignacio.
Listening to clamor
IGNACIO said that the SSS has been listening to the clamor of various labor groups and members to defer the said mandated increases; however, the move is designed to protect the fund life of the SSS.
“We understand the plight of our covered employers and members, but, at the same time, it is our duty to secure the long-term viability of the SSS fund entrusted to us for the continuous delivery of SSS benefits to our current and future members, as well as their beneficiaries,” Ignacio said.
“Moreover, these scheduled reforms are pursuant to RA 11199. Thus, we are bound by law to implement it,” she added.
Increase, credits
THIS January, the SSS contribution rate was increased to 13 percent from the previous 12 percent.
The minimum monthly salary credit has been raised to P3,000 from P2,000 (except for kasambahay and OFW members whose minimum MSC will remain at P1,000 and P8,000, respectively), while the maximum MSC is set at P25,000 from P20,000.
For employed members, land-based OFW members in countries with Bilateral Labor Agreements (BLAs) with the Philippines, and sea-based OFW members, the additional 1 percent will be divided between them and their employers, bringing the contribution rate breakdown to 8.5 percent for employers and 4.5 percent for them.
To illustrate, a member paying under the P10,000 MSC will now pay a monthly contribution of P1,300, which is P100 higher than the P1,200 in 2020.
Suppose the member is employed as a land-based OFW in a country with a BLA with the Philippines or a sea-based OFW. In that case, the P100 additional contribution will be divided as P50 from their employers for a total employer share of P850 and P50 from them for a total member share of P450.
Still cheaper
WHILE the MSC to be considered for the computation of benefits under the regular social security program is capped at P20,000, contributions pertaining to the MSC in excess of P20,000 will go to the Workers’ Investment and Savings Program (WISP), a provident fund that will yield additional pension income for members contributing under it.
For example, a member will be paying under the P25,000 MSC. Based on the 13 percent contribution rate, his/her monthly contribution will be P3,250, of which P2,600 will go to the regular social security fund, while the remaining P650 will go to the WISP.
The SSS said these reforms will allow members to save more for their retirement.
The SSS remains the cheapest pension and most accessible pension scheme in the country that offers seven kinds of benefit programs and various loan privileges. With additional reports by Samuel P. Medenilla