No contribution increase, no SSS pension hike
President Duterte should approve the P2,000 across-the-board increase in the Social Security System’s monthly pension only if there will be a corresponding increase in members’ and employers’ contributions to the fund, according to the country’s economic managers.
Specifically, the heads of the departments of finance, budget and management as well as that of the National Economic and Development Authority pitched an increase in members’ contributions to 17 percent from 11 percent.
In a statement, the DOF said a Dec. 15 memorandum to the President signed by Finance Secretary Carlos G. Dominguez III, Budget Secretary Benjamin E. Diokno and Socioeconomic Planning Secretary Ernesto M. Pernia warned that without an accompanying “upward adjustment or restructuring of the contribution rate,” the SSS’s unfunded liabilities would further balloon to P5.9 trillion from P3.5 trillion at present.
Passing the P2,000 pension increase would not only “adversely affect the Republic’s credit rating” but also bring the SSS to bankruptcy “and left with no funds for other members in the future,” they said.
As for the proposal for the government to subsidize the pension fund to maintain its financial viability, they said such a move should be the “last resort.” The DOF said the economic managers believed “it remains the primary responsibility of member-employees and their employers to keep the fund not only for their benefit but for future generations of members as well.”
“Given that government subsidy only introduces undue fiscal burden to taxpayers, [the three economic managers] pointed out in their joint memo that the public must not be made to carry the burden of the increase which benefits only privately employed individuals,” the DOF said.
According to the DOF, “to save the SSS from going bankrupt and enable it to continue providing the mandated benefits to other members who are not yet entitled to monthly retirement payments, the three secretaries recommended to President Duterte an increase in the members’ contribution from the current 11 percent to 17 percent upon the implementation of the Congress-proposed across-the-board pension hike.”
This month, the House of Representatives as well as the Senate pitched joint regulations aimed at implementing a staggered increase in SSS pensions, with the first tranche worth P1,000 beginning January next year followed by the remaining P1,000 in January 2019.
“Without a corresponding increase in contribution, the three secretaries said the congressional proposal would cut the actuarial life of the pension fund by 14 to 17 years from 2042 to 2025-2028 because the SSS will have to cough up an additional P32 billion annually to cover the initial P1,000 hike and P62 billion for the entire P2,000 increase in monthly payments,” the DOF said.
Quoting the memorandum, the DOF said the three economic managers told President Duterte that “while we recognize the thrust of the joint resolution to promote the well-being of the country’s private sector retirees… any increase in pension without increasing member contribution and expanding its membership base would introduce severe fiscal issues, and should be discouraged.”
“We strongly recommend that any improvement in pension benefits be accompanied by an upward adjustment or restructuring of the contribution rate from employee members and their employers, as well as self-employed and voluntary members… We do not believe it is unfair to ask for this increase as pensions have increased 22 times while the contribution rate has only increased three times since the establishment of the rates in 1980,” they added.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.