SSS needs P38 billion yearly to fund pension increase

MANILA, Philippines — State-run Social Security System (SSS) will need to shell out about P38 billion in additional expenses a year to fund the proposed second tranche of P1,000 pension hike, an official said yesterday.

In a media webinar, SSS vice president for public affairs and special events Fernan Nicolas said the proposed pension hike would have huge funding requirements if implemented.

“The amount to be released is huge. We need an additional P38 billion a year so that we can fund the P1,000 increase,” he said, noting that there are currently about 2.8 pensioners in the system.

Nicolas said the need for more funds could still increase as more members of the SSS retire.

Given the huge requirements, the SSS official reiterated that there is a need to study the proposed pension hike to ensure that the state pension fund can truly afford to release additional benefits.

“We need to study this because the system, the fund should be financially sound before we can release it,” he said.

Nicolas warned that granting the P1,000 pension hike without a proper study would be “dangerous” considering the fund’s current financial position, which has been affected by the coronavirus pandemic.

“The SSS lost huge contributions monthly because many members lost their jobs,” he said.

However, the SSS official clarified that the state fund is not against the proposed pension hike, which is a campaign promise of President  Duterte.

“We are not opposing. But at this point in time, as said by our president Aurora Ignacio, we need to study this thoroughly because we have an economic crisis and the SSS is affected,” he said.

During the Laging Handa briefing on Wednesday, SSS president and chief executive officer Aurora Ignacio said implementing the P1,000 pension hike would not be good for the SSS “in the coming years.”

Ignacio said the   pandemic has affected the management of the fund, as the SSS expects to pay more benefits than the contributions it would collect.

The state pension fund booked a total net income of P28.57 billion in the first nine months, a decline of 8.05 percent   from P31.07 billion in the same period last year.

Total contributions also declined by 4.8 percent to P153.15 billion from P160.91 billion, while investment and other income surged 85.3 percent to P22.46 billion from P12.12 billion.

Benefit payouts, meanwhile, reached P130.8 billion, down 4.05 percent as compared to last year’s level of P136.32 billion.