MANILA, Philippines - The Asian Development Bank (ADB) said it supports an increase in the contribution rate in the Social Security System (SSS) and its merger with the Government Service and Insurance System (GSIS).
In a recently released study, “Pension Systems in East and Southeast Asia, Promoting Fairness and Sustainability”, the ADB also recomended that the Philippine government raise the retirement age and gradually shift to a defined-contribution system.
The SSS covers the private sector while the GSIS serves the public sector.The military establishment is attended to by the Armed Forces of the Philippines Retirement Service Benefit System (AFPRSBS). Together, they cover about 79 percent of the country’s labor force and 28 percent of the population aged 60 and older.
“The large discrepancy between the contribution rate of the GSIS which is 21 percent, and the SSS contribution rate of 10.4 percent, reflects the significant imbalance between contributions and benefits in the SSS,” the ADB study pointed out.
The study suggested that the SSS must increase the contribution rate to be able to reduce the gap between contributions and benefits. If delayed “in a later date,” the provident fund will be forced to charge a heftier amount to later generation of workers.