The Social Security System (SSS) executives and its board said on Wednesday that there is a need to increase premium contribution among SSS members that should go along with the pension hike. SSS President and CEO Emmanuel Dooc said that the agency does not have the option of maintaining contribution rates while granting increased pension.
Both Congress and Senate approved the bill that grants pension hike for SSS pensioners in October. The bill, however, was still pending at the Office of the President as President Rodrigo Duterte still did not sign the bill into law.
Duterte said that he was still looking for a win-win solution as he was meeting with his economic managers, Budget Secretary Benjamin Diokno and Finance Secretary Sonny Dominguez. Both Diokno and Dominguez supported the need to increase the contribution of 30 million members of the SSS to maintain its liquidity when it gives out additional pension.
The SSS board proposed for 1.5 percentage point rise in members’ monthly contribution beginning June. In a sample computation, a member paying the lowest monthly contribution of P110 could pay an increase of up to P125.
Here are three reasons why SSS and Duterte’s economic managers push for the increase of SSS contribution:
1. SSS could extend its fund life if contribution increase would be implemented.
SSS chair Amado Valdez said SSS would need to shell out P33B if more than 2 million retirees would get the pension hike this January. This only meant that SSS would lose money and shorten the SSS fund life to the year 2032.
Valdez said that with the increase, the SSS fund life could be extended up to 2040. “It was really well studied (by the board) and that is what we submitted to the President (Duterte) for his approval,” CNN reported Valdez, as saying.
2. The government cannot subsidize the SSS for additional funds.
“This is a private pension fund. Taxpayers should not be made to subsidize it. It should operate on its own,” Yahoo News reported Diokno, as saying. Diokno added that previous presidents did not even infuse funds into the SSS.
3. SSS can source funds from the proposed higher contribution for SSS investments, not only for pension hike.
Marissa Bugante, vice-president for public affairs and special events of the SSS, said that proposing a gradual increase of contribution was already part of the agenda of the agency. She added that there is just a need to fix structural defects by arriving on the formula that could make the amendments possible.
Dooc said that SSS needs some legislative amendments to strengthen the fund.
“We also do not want that every time there is a clamor for a higher pension, our answer will be to add contributions. We have to prove we can also source funds,” The Philippine Star reported Dooc, as saying.
What do you think of the dilemma between SSS pension hike and higher contribution? Is it necessary for SSS to raise contribution rates of members? Let us know in the comments section below.