SSS open to raising pensions, if…
To allow members to enjoy a higher amount of pension upon retirement, state-run pension fund Social Security System plans to index benefits to inflation moving forward.
But SSS president and chief executive Emmanuel F. Dooc told reporters Wednesday that while they were amenable to increasing pensions this year, it should be coupled with an increase in members’ and employers’ contributions also this year.
“The P1,000 increase in pension benefit can be implemented as long as guaranteed by the President that there will be an increase in contributions five to six months later,” Dooc said. Under the SSS charter, any increase in members’ contribution to be pitched by the Social Security Commission must also be approved by the President.
Dooc pointed out that hiking the contribution rate to 17 percent by 2020 from 11 percent at present would benefit members and pensioners in the long run, as doing so will prolong the fund life to 2040.
Without a compensating measure, implementing the proposed P2,000 pension hike will shorten the SSS’ fund life to 2032 from 2042 previously. This is because the pension fund will need to shell out an additional P32 billion in the first year of implementation, if the proposal to give it in two tranches of P1,000 each—the first this year and the next in 2022—prospers.
An increase in pension will result in higher benefits pay out of P168 billion in the first year that will exceed the average of P155 billion in contributions that the SSS collects yearly, Dooc said.
Dooc disclosed that they were looking into adopting indexation such that the pension benefit will be based on the cost of living as well as workers’ salaries so that the replacement incomes when they retire will not be very low compared to their actual salaries when they were still working, he explained.
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