MANILA, Philippines — The Social Security System (SSS) is reviving its proposal for an increase in contributions from members and their employers, saying it needs to shore up revenue collection so it can sustain the benefits extended to pensioners.
An official of the pension fund for workers in the private sector is hoping legislators will prioritize in the 16th Congress a bill seeking to amend the fund’s charter so that an increase in contributions can be imposed.
An SSS commissioner, Diana Pardo-Aguilar, said the proposal had the backing of President Aquino.
Aguilar said the SSS needed to implement an increase in contributions soon to help it achieve the goal of making the fund perpetual. Achieving perpetuity is an international standard for any pension fund.
The current “actuarial life” of the SSS fund is only up to 2039, according to the commissioner. This means that should the existing rates of contributions remain unchanged, the SSS will be able to service pension claims only until 2039.
Growth in SSS expenses has been outpacing the increase in revenue collection, Aguilar said.
But she said than an actuarial life of until 2039 was not bad and was far from being worrisome.
Nonetheless, Aguilar said the pension fund would have to increase its collection to achieve perpetuity and to enable it to continually and efficiently service its members.
Currently, the SSS has around 29 million members.
Aguilar said the SSS could not yet disclose an official rate of increase in contributions that it would like to impose.
But should SSS officials and stakeholders decide that the increase was too big, then the SSS could push for several but smaller amounts of increases to be implemented over several years.
“We can make the increase gradual if that would be more feasible. We will consult with stakeholders, including employers,” Aguilar said at a press briefing.
Under the current contributions schedule, the minimum monthly contribution is set at around 10.4 percent of an SSS member’s compensation. The member shoulders around 30 percent of the contribution, while his or her employer shoulders 70 percent.
As the SSS underscored the need to increase contributions, it reported a surge in net revenue. SSS president Emilio de Quiros Jr. said the pension fund registered net revenue of P36.2 billion in 2012, up by 42 percent from P25.55 billion in 2011.
The increase in net revenue was attributed to efforts to streamline operations aimed at improving collection from members.
De Quiros also reported that the SSS collected P16.44 billion in net revenue in the first four months of 2013, on track of meeting the goal of collecting P30 billion for the full year.
About 70 percent of the revenue came from contributions, and the balance from investment income.
De Quiros said that with growing net revenues, the SSS financial standing should not be viewed as something that was in trouble.
“The SSS is not losing funds; we are actually registering very strong net revenues,” he said.
Nonetheless, he stressed the need for an increase in the rate of contributions so that the acceleration of growth in expenditures expected in the years to come would be sufficiently met by rising revenue.