P-Noy saves SSS from bankruptcy

AS A MATTER OF FACT - Sara Soliven De Guzman (The Philippine Star) - January 17, 2016 - 9:00am

Was the President heartless when he vetoed House Bill 5854 which seeks to increase the pension of retired SSS members? Was his decision based on sound judgment? I think this time around he made the right decision. After careful scrutiny of SSS information and statistics, he had to make that tough decision to protect the welfare of the majority. If you look at the current fiscal state of SSS, I think you would agree with P-Noy.

Yes, it is difficult to veto something that concerns senior citizens. As it is they are already deprived of good public service particularly on health and welfare. The meager pension they get every month just isn’t enough to cover their monthly expenses. Government must carefully study the programs aside from their SSS benefit to meet their needs.

So, what is the fuss all about? If we look closer at this pension issue with an open mind and heart we will discover the problem on why P-Noy vetoed the bill. We must remember that SSS is a government institution with income coming from the members’ contribution and from investments. The move of the president to veto the law (to have an across the board increase in the SSS pension by P2,000 per month) may be unpopular but it is a prudent and professional decision, free from political interest or motivation, to protect the majority and to see to it that the current contributing members will receive their corresponding benefit in the future.

The P2,000 per month increase is translated to an additional annual pension of (1,043,026 pensioners x P2,000 x 13 months) P27.12 billion and this figure is increasing as the number of pensioners increase. According to SSS President and CEO Emilio S. de Quiros, Jr., the P2,000 increase and resulting shorter fund life will greatly affect the 33 million members and pensioners as well as their dependent spouses, minor children and other beneficiaries who are also mandated to receive their own share of SSS benefits.

Michael Victor N. Alimurung, SSS Representative for the General Public added that it is risky to compel SSS to implement a drastic pension increase as proposed by a bill silent on any source of funding.

Before SSS can give out this additional benefit, there should be a thorough study as to where to source the fund. They can consider either to increase the contribution or to place the fund in a higher yielding investment. The increase may also be funded by the government from tax revenues.

Good financial management dictates for the determination of the source of revenue for every expenditure. Increasing the collection efficiency may increase the collection but it must also be considered that every increase in collection will also have a corresponding increase in future retirement benefit.

Data shows that to implement the P2,000 pension increase and still maintain the present fund life of 26 years, the contribution rate needed to be increased is from the present 11 percent to 15.8 percent. In the absence of a contribution rate increase, the government would have to provide a minimum annual subsidy of P130 billion per year starting 2030, after the SSS investment reserve fund has been fully exhausted.

Despite having some financial achievements over the past few years such as: higher annual net revenues from 2010-2014 at P33 billion; assets that grew by 20 percent from P298 billion in 2010 to P447 billion in October 2015; and contributions collected every year, SSS still has not reached sustainability. It has to think of other ways to further strengthen and stabilize its funds.

No one in the agency or in the government had the foresight that sooner or later, this pension increase issue will crop up. Now, if the P2,000 pension increase is not viable because it will totally deplete the funds, then maybe the government can consider a lower amount. Perhaps the P500 that P-Noy mentioned (but was also quick to say that he could not give the assurance that it can be done) may be considered. A compromise must be reached. We are talking about a group of people who are in the twilight years of their lives. It is the duty of the state to ensure that these people are treated well and are living a comfortable life. Remember they too were once contributing members of the SSS.

SSS is a state-run social insurance program for non-government employees. It provides its members social security benefits: retirement, death, disability, maternity, and sickness. Members may also avail of salary or calamity loans. The Government Service Insurance System (GSIS) on the other is mandated to provide and administer social security benefits for government employees: compulsory life insurance, optional life insurance, retirement benefits, disability benefits for work-related contingencies and death benefits. Members are also entitled to loan privileges such as salary, policy, emergency and housing loans. Its current President Robert Vergara appointed by P-Noy has been commended for showing impressive financial performance in the last 5 years.

Other than these social security agencies, there is also the Pag-Ibig Fund that provides assistance to its members who want to avail of housing loans and salary loans. Since 2010, Pag-Ibig Fund, through its president and CEO, Atty. Darlene Marie B. Berberabe has accomplished a lot of things: doubled the benefits for members without increasing the mandatory monthly contribution of P100; increased the loan cap from 3M to 6M, and lowered the interest of regular housing loan from 11.5% to 6.5%; implemented an affordable housing program for minimum wage earners and imposed the lowest interest rate of 4.5%; reduced the calamity loan interest rate by almost half from 10.75% to 5.95% which is the lowest in the market for calamity loan; doubled the branches from 38 in 2010 to 77 at the present time, with target of 117 at the end of 2015; near doubling the membership base from 8M to 15.5M which means more members to contribute to the Fund; and doubled the volume of transactions of its members. Sanamagan! Why can’t we have more government officials like her?

Atty. Berberabe has also instituted reforms with corresponding results: Outsourcing of collection such that 51% of non-performing loans were converted to performing loans, which means more funds collected for the benefit of more members; streamlining operations by outsourcing and consolidating business processes, which saved the Fund hundreds of million pesos; restoration of the faith and integrity in the Fund which was marred by the Globe Asiatique controversy in 2010; and ISO-certifying Pag-Ibig Fund to show commitment to maintain global standards in service.

These are specific accomplishments that signify the growth, development and sustainability of the agency in all aspects. Perhaps the SSS leadership can emulate the kind of leadership Pag-Ibig Fund has so that the agency can achieve its mission of implementing positive measures that would result to the financial stability of the institution. In doing so, it will be able to extend meaningful benefits, and maintain the trust and confidence of its members.

SSS, GSIS, Pag-Ibig Fund are institutions established to provide social security to the citizens. As such, the welfare of its members must always be the priority.

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