SSS clarifies issues

This refers to the editorial entitled “SSS o SOS” which was published in Freeman on Jan. 22; column of Marichu Villanueva entitled, “Bleeding hearts” published in The Philippine STAR on Jan. 22; and the column of Mary Ann Reyes entitled, “Strength of character” published on Jan. 24.

We would like to reiterate that the grant of performance-based bonuses to SSS officials and employees are authorized by the Governance Commission for GOCCs, the oversight body which religiously monitors the performance of GOCCs and grants authority to give performance-based bonuses. The granting of a performance-based bonus is based on the accomplishments of SSS which is being evaluated annually by the GCG.

The performance-based bonus is a merit-based incentive being given not only to SSS but to other GOCCs. The performance-based bonus depends on the performance of the institution and subjected to guidelines of the GCG. SSS is evaluated through a scorecard which contains our performance targets for the year. In order to qualify for the performance-based bonus, SSS must accomplish at least 90 percent of our GCG-approved performance targets.

The SSS financial statements would show that it is managed well. In the past five years, the SSS fund showed tremendous growth and increased the fund life by four years from the previous valuation of 2039. SSS has improved its contribution collections from members particularly those in the formal sector. Collection efficiency is defined as the amount of contributions that SSS has collected versus the collectible amount computed by dividing contributions by the collectible amount. Based on the 2013 COA report, SSS contribution collections stood at P103.1 billion against the collectibles of P116.6 billion, therefore, SSS collection efficiency for that year was 88 percent. This ratio improved in 2014, as contributions further increased to P120.65 billion from P103.1 billion resulting to an almost 90 percent collection efficiency.

After 12 years when benefit payments outpaced contributions collected, SSS once more experienced contribution surplus starting 2012. In October 2015, the contribution surplus amounted to P9.9 billion. This indicates that members’ contributions are more than enough to pay out benefits and operating expenses without dipping into the investment income. Prior to 2012, contribution collection alone was not sufficient to pay benefits, and the SSS had to dip into the investment income to cover the deficit.

In terms of revenue, SSS reached P44.5 billion net revenue in 2014. The average net revenue of SSS quadrupled from P8 billion (2000 to 2009) to P33 billion (2010 to 2014). For the same period, total assets grew by 50 percent from P298 billion in 2010 to P447 billion in October 2015.

We would like to correct the notion that the proposed P2,000 pension increase is just a small adjustment. The proposed pension increase will negate the gains attained under the present administration. The SSS will have to shell out P56 billion annually to support the pension increase as compared to the annual net revenue of P30 billion to P40 billion. SSS will incur a deficit of P16 billion to P26 billion annually. Thus, SSS has to dip into its investment income to cover the deficit.

As a result, SSS fund life will be shortened by 13 years, from 2042 to 2029. Due to the current low market sentiment and divestment plan, fund life is projected to further decrease to 2027 or 11 years from now. This means that SSS can only pay all its obligations up to 11 years from today.

Allow us to remind you that SSS, as a social-security institution, is a long-term proposition. We deal with commitments that extend many decades into the future. All 33 million SSS members need to be assured that the agency is implementing a solid financial plan to back up all its commitments for both short-term and long-term benefits. Thus, any proposed changes in the benefit structure, or in the amount of pensions must be carefully evaluated to ensure the fund viability of SSS for the benefit of all its members.

We would like to inform that SSS is in the process of disposing the assets through public bidding such as the Manila North Harbour center lots, HK Sun Plaza, Marilao and Ville Josefina properties. From 2006 to 2015, the SSS has sold over 2,100 acquired properties with a total selling price of P1.2 billion through the annual Housing Fair organized by the Housing and Urban Development Coordinating Council (HUDCC).

In the first 11 months of 2015, the SSS generated an income of P620 million from the lease and sale of SSS-owned real estate properties while about P1 billion worth of assets are already up for bidding such as the HK Sun Plaza which was offered for long-term lease last November 2015. The rest of SSS assets are either for sale, or are retained as SSS property due to their expected increase in value.

It is unfair to compare SSS to the Home Development Mutual Fund (HDMF) since we have different mandates. The HDMF provides a national savings program and affordable shelter financing for the Filipino worker while SSS primarily administers pension fund for workers in the private sector and provides social security benefits such as sickness, retirement, maternity, disability, death, funeral, and employee’s compensation.

Notably, SSS provides more benefits to its members as compared to HDMF which primarily finance housing loans.

We are open to public scrutiny and our financial statements and accomplishment reports are available in our website as confirmed by GCG. These reports validate our continuous efforts to improve the benefits of our pensioners while ensuring the financial viability of the SSS fund. – MARISSU G. BUGANTE, vice-president, Public Affairs and Special Events Division, Social Security  System