SSS postpones contribution hike

Revia Mae E. Sibal and Lorrianne Aryenz V. Valdecantos | January 16, 2018

Photo from ABS-CBN News

Originally planned to be implemented by January, Social Security System’s (SSS) move to increase the monthly contribution of its members may be delayed up until the second quarter of 2018. The decision to increase the contribution was instigated by the pension hike last year.

The Congress’ prioritizing other matters, like the impeachment trial of Chief Justice Maria Lourdes Sereno, was said to be the cause of deferment.

SSS President and Chief Executive Officer Emmanuel F. Dooc said that once the SSS charter amendments passes through the Congress, they could process it immediately so the contribution hike will be implemented soon.

The contribution rate of SSS will rise up to 12.5% to enable the pension fund for the private sector workers to cover the pension hike of the retirees. They were unable to begin it May last year as they awaited for the passage of Tax Reform for Acceleration and Inclusion (TRAIN) Act.

President Rodrigo Duterte ordered the increments of 1.5 percentage points raise in SSS members’ contribution per year until 2020 to reach 17% from the current 11%.

The increase was a plan to avoid the reduction of the SSS’ actuarial life, a decrease of 14-17 years, from 2042 to 20515-2028, based on the 2016 estimate.

In January last year, the President already ordered a two-stage monthly pension hike of P2,000 and half of it was being dispersed to pensioners since March.

However, the pension increase cuts the net income of SSS to a total of P9.69 billion by the end of November, according to the latest SSS data.

According to Dooc, through the intensive collection of contributions, following the drive of their employees to establish a direct contact on their members, they made it possible for the pension fund revenue to blow up 9.3 percent in the first 11 months of last year.

These contributions are making up four-fifths of the revenue of SSS along with the remaining pie that is made up of investments and other incomes.

The additional P1,000 for pensioners last March was a big hit for SSS as their expenditures were totalled P157.39 billion, a whopping 27.8 percent increase from the P123.7 billion in 2016.

“Pension adjustments arising from the un-lumping of 1985 to 1989 contributions which we began to release to SSS death, retirement and disability pensioners in 2016 correspondingly increased benefit disbursements,” SSS explained.

There is still an effect on the 2017 disbursement benefits and the tranches of adjustments that were released way beyond 2016 and still, there are those additional tranches that were released in 2017 that were all benefit payments that ended in November 2017.

As the retirement benefits from January to November climbed to P91.22 billion from its past record from P72.56 billion, the profit of SSS is now in projectile free fall.