SSS execs fire back at Aquino critics on pension hike veto
The Social Security System (SSS) fired back at critics of President Aquino’s unpopular decision to veto a bill seeking an across-the-board pension increase of P2,000, saying it was the “right move” that saved the fund from an early bankruptcy.
In a press conference Monday, SSS officials said it was irresponsible to increase the pension without any corresponding hike in members’ contributions, which they described as among the lowest in the region.
Such an increase would also lead to a massive government subsidy that would favor even the SSS’s wealthiest pensioners, the officials said.
“We admit that many of our pensioners need money. We will not turn our back on them,” Michael Alimurung, Social Security Commission representative for the general public, said in the briefing. “But remember, not all pensioners are poor.”
According to the private-sector pension fund, the P2,000 increase for about 2.15 million pensioners would cost an additional P56 billion for 2016. That figure is expected to increase about 10 percent every year as the number of pensioners rise, Alimurung said.
SSS president and CEO Emilio de Quiros Jr. said in the same briefing that the increase would lead to a deficit of P26 billion from an expected income of P41 billion this year alone. Moreover, the increase would end the fund’s life to as early as 2027 from the current projection of 2042, which is 26 years from now.
“We are sensitive to our pensioners but it has to be balanced. We cannot keep on spending without a corresponding [contribution] increase to support the SSS,” de Quiros said.
To support the current 26-year life, the contribution rate should go up from the current 11 percent to 15.8 percent, he said. If the government chose to give a subsidy to close this gap, that subsidy would amount to P130 billion starting in 2028, the SSS said.
In terms of absolute value, the SSS pays members a return of P6 to P15 for every P1 they contribute.
Alimurung also defended the agency’s collection record, amid calls for it to increase its efficiency.
He said the SSS has a high collection rate in the formal sector but he said bulk of the membership is comprised of those in the “informal sector” or those unable to pay for various reasons like lack of resources or unemployment. An individual is considered a member after having paid the contribution for at least one month.
He said out of the SSS’s 33 million members, only 12 million are considered “active”.
“Collection efficiency is not the solution,” Alimurung said. “Do we want to collect from people who do not have any ability to pay so we can increase pensions for people who can pay?”
He said there were ways to increase the pension without a corresponding contribution hike but these would entail painful changes such as longer retirement age for workers or a reduction in benefits. Apart from pension, the SSS provides sickness, disability, maternity, and death benefits.
The SSS last increased the pension in 2014, via a 5 percent hike.
De Quiros also said reforms have been undertaken under the current administration.
Their annual revenue has increased to an average of P33 billion from 2010 through 2014 against P8 billion between 2000 and 2009. Assets have also increased by 50 percent to P447 billion as of October 2015 since 2010.
De Quiros said those gains would have been erased had the P2,000 pension hike been implemented. Moreover, the SSS still has a long way to go in achieving its ideal fund life of 70 years.
“In the coming years, under the future administrations, if they continue to improve the performance, the SSS can implement a bigger pension increase,” he said.