SSS proposes P600 hike in monthly member contribution

To fund P2,000 pension hike

MANILA, Philippines - An additional premium of P600 might be added to the monthly contributions of Social Security System (SSS) members to fund the proposed increase in the P2,000 monthly pension of retired workers.

SSS chief actuary and senior vice president George Ongkeko Jr. said in a news forum in Manila yesterday that  the amount is equivalent to a 1.5-percent increase in the contribution rate needed to fund the pension hike.

“For every P500 pension increase, P5 will be added to daily  contributions made by both the employer and the employee,” he said.

The contribution hike would apply to all paying members, be they employers, employees or self-employed workers, Ongkeko said.

Once the pension hike is approved, around P56 billion will be paid to around 2.15 million SSS pensioners in the first year of implementation.

“And (the fund) would increase thereafter as pensioners grow in number every year,” Ongkeko said. “We can expect a five to 10-percent increase every year.”

He said SSS would have to add around half of the actual pension payment once the hike is implemented. He said in 2015, SSS paid around P112-billion in pension.

He said the SSS could implement the proposed pension hike “for as long as there is a sustainable funding source,” hence the target P600 increase in monthly contributions.

He said that if the pension hike would be implemented without any fund replenishing mechanism, the trust fund would only last until the year 2025 when SSS projects its fund to last until the year 2042.

Studies by SSS showed that the contribution rate must be increased to at least 17-percent from the current 11-percent to implement the pension hike while maintaining the company’s financial status.

Meanwhile, Surigao del Sur 1st District Rep. Prospero Pichay, Jr. is looking into the possibility of the government subsidizing the amount required for the pension hike.

“If the P2,000 pension hike is approved, the government needs around P50-billion yearly so the so-called perpetuity of the SSS fund is ensured,” he said.

The fund could come from revenue-generating agencies, he added.

Pichay said “the government can give subsidy, and at the same time SSS can increase contribution premium so the pension hike can be ‘doable.’”

But Pichay admitted that “not any law could encroach on the fiscal independence of the SSS because we have no funds there.”

Ongkeko, for his part, said Congress could look into the possibility of amending the SSS Charter.

“We have to ask for the approval of the President for us to implement any increase on the contribution and benefits that we plan,” he noted.

“In fact, the last time we implemented a contribution increase was when former President Gloria Arroyo approved our plans,” he added.

Indeed, Republic Act 8282 or the Social Security Act of 1997 says that “minimum  and  maximum  monthly salary  credits  as  well  as  the  rate  of  contributions  may  be  fixed  from  time  to  time  by  the  commission through  rules  and  regulations  taking into consideration  actuarial calculations and rate of benefits, subject to the approval of the president of the Philippines.”

On Sept. 7, the House of Representatives’s Committee on Government Enterprises and Privatization approved Bayan Muna party-list Rep. Carlos Zarate’s motion for the omnibus approval of the 15 pending measures calling for an increase in the SSS monthly pension.