SSS trumpets increased collections, higher pension

MANILA, Philippines - Higher pension, bigger collections and an expanded branch network.  These are some of the changes  the Social Security System (SSS) has seen during its first year under the Duterte administration.

While President Duterte made it clear from the election campaign period that his focus would be on the war against drugs and instilling peace and order in the country, he did express concern over members of the state-run pension fund even before he was elected president.

Among the SSS-related issues that Duterte focused on during the campaign period for the 2016 presidential elections were  the proposed hike in pension as well as merging the SSS and the Government Service Insurance System.

Duterte was vocal about his opposition to President Aquino’s decision to veto the proposed P2,000 pension hike, saying the pension given to the elderly was not enough.

In January 2016, then President Aquino rejected House Bill 5842 —which proposed a P2,000 hike in the monthly pension of SSS members —  due to the financial consequences the agency would have to face in the future.

Aquino emphasized that approving the higher pension could result to the pension fund going bankrupt by 2029 as it would be forced to use its Investment Reserve Fund in order to pay out the higher monthly pension to its members.

Duterte disagreed with Aquino’s insights,  saying the foreseen problem could be corrected along the way, especially if the economy improves by that time.

It’s been a year since President Duterte assumed office and  he has already fulfilled one of his campaign promises,and that is to increase the pension of SSS members.

Pension rate increase

The SSS has implemented a staggered P2,000 across-the-board increase in its monthly payments to its 2.2 million member-pensioners.  The first P1,000 hike was implemented in March with the next P1,000 by 2022 or earlier.

SSS expects additional benefit expenditures to reach P32 billion in the first year of implementation of the pension hike.

“Almost 2.2 million SSS pensioners are expected to receive the initial additional benefit. The number of pensioners is expected to increase with about 150,000 new retirees every year,” SSS said.

Challenged by higher expenditures

The additional benefits for the fund’s pensioners has led to higher expenditures incurred by the SSS.

In the first quarter, SSS disbursed a total of P44.77 billion, a 43.06 percent increase from the P31.3 billion disbursed in the same period a year ago.

“This jacked-up our disbursements for the period by nearly P7 billion,” said Emmanuel Dooc, president and chief executive officer of SSS.

Dooc

According to SSS, the additional P1,000 benefit disbursed in April was also included in the total expenditures for the first quarter.

This resulted to a 67 percent drop in net revenue to P4 billion.

Dooc admitted that SSS is “challenged” by the fund’s higher expenditures, as he openly talked about initiatives the pension fund is considering in order to generate more income and collections.

SSS is considering selling idle properties or developing the same into corporate centers to generate recurring income.  

To increase collections, the agency is looking to expand its branch network and to enlist more members.

Collections continue to rise

Despite the higher disbursement, the SSS reported that revenue from member contributions rose 9.6 percent in the first four months of the year to P52.18 billion.  The increase was attributed the efforts made by the agency to improve services to its members.

“We’ve also increased our presence so our members  can easily reach us.  We opened three new branches, 15 new offices and two foreign offices. We’ve also relocated 14 of our branches since we assumed our post last November 2016,” Dooc said.

Among its recently relocated branches are its Roxas City branch in Capiz, its San Francisco del Monte in Quezon City, SSS Novaliches and SSS Mandaluyong.

Dooc said the pension fund  targets to add around 20 to 25 new branches and serviced offices this year, which would raise its branch network to 315. At present, the SSS has around 301 branches.

In addition, the SSS said the  aggressive contribution collection drive, particularly its own version of “Operation Tokhang” dubbed as “Run After Contribution Evaders” (RACE) or running after delinquent employers has also been a growth driver.

Pension fund remains stable

Despite the admitted challenge of higher expenditures arising from the approved pension hike, Dooc said members should not be alarmed.

“Our current contribution collection and investment income from last year is enough to finance the additional P1,000 benefit for pensioners so we assure the public that the pension fund remains strong and viable,” Dooc said.

As of the end of the first quarter, the SSS investment reserve fund stood at P478 billion. 

“This fund is invested to lengthen the lifespan of the pension fund to pay for future benefits, the SSS said.

Attracting more members

The pension fund’s membership base has breached the 35 million mark as of the end of March this year, well on track to hit its 36 million target by year-end.

To increase its membership, SSS has partnered with various embassies located  in the Philippines to be able to enlist their Filipino employees as members.

Last month, the SSS signed an agreement with the Embassy of the Federal Republic of Nigeria to cover around 15 of  its Filipino workers, making it the 41st foreign diplomatic entity in the country to be covered by the pension fund.

In addition, the SSS earlier said it has engaged in official memorandum of agreements with different professional groups such as the Integrated Bar of the Philippines to encourage lawyers to become active members of SSS.