SSS net loss doubles in 2021

MANILA, Philippines — State-run Social Security System (SSS) doubled its net loss to P844 billion in 2021 from P424 billion in 2020 due to the adoption of the margin for adverse deviation in the agency’s policy reserves.

SSS president and CEO Michael Regino said the use of margin for adverse deviation serves as a buffer for future claims that the SSS only started to include in its financial statement in 2021.

The SSS, in its unaudited financial statement, said changes in its policy reserves jumped by 89 percent to P872.36 billion in 2021 from P461.75 billion in 2020. The adjustment accounted for the bulk of the jump in expenses, causing the agency’s net loss to double.

Further, benefit payments went up by 15 percent to P223.98 billion in 2021 from P194.87 billion in 2020 due to the release of social security to members and pensioners.

The SSS also recorded increases in both personnel services and maintenance expenses, but posted reductions in financial and non-cash items.

The SSS said its service and business income expanded by eight percent to P255.31 billion, as gains also ticked up by four percent to P18.88 billion.

In particular, member contributions grew by 13 percent to P235.59 billion in 2021 from P208.96 billion in 2020, as workers who regained their jobs with the lifting of quarantine restrictions started paying their premium again.

Last year, state-owned firms SSS, Government Service Insurance System, and Philippine Health Insurance Corp., adopted the Philippine Financial Reporting Standards (PFRS) 4 as ordered by Finance Secretary Carlos Dominguez.

As a result, liabilities owned by the state insurers bloated to P9.94 trillion in 2020, or more than 55 percent of the economy, from just P153.59 billion in 2019. The agencies saw their combined equity flip to a net loss of P7.59 trillion from a net gain of P1.96 trillion.

However, Dominguez said the government funds face no risk of shutdown despite the spike in their liabilities. He said the PFRS 4 requires insurers to put up a reserve pool to pay for both actual and future claims of their members.

Regino said policy reserves, as reflected in the unaudited financial statement of the SSS, include future disbursements of benefits and pensions, and they serve as a guide to maintain a healthy financial standing.

Prior to adopting PFRS 4, state insurers like SSS only book a liability when a contributor avails a benefit, registering all premiums and fees collected from members as income.