The head of the Duterte administration’s economic team has urged state-run Social Security System (SSS) to immediately decide on which track to take to maintain its actuarial life despite the pension hike being implemented since early this year.
“The benefits have increased—unless they raise revenues, their fund life will continue to drop. It already dropped by 10 years, so the question is ‘are they comfortable with the current fund life, or do they want to bring it up to a real stable position?’ I guess their board has to decide on what to do but there are ways of doing it,’ Finance Secretary Carlos Dominguez III told reporters on Thursday.
“They have to manage their funds better, get better yield on their funds, or they can increase contributions or remove the cap on the salary—it’s only P16,000 so anything over P16,000 doesn’t get any increase, they can do that. By doing that, they may not even have to increase contribution. But I leave it up to their board to make recommendations and we will make comments on the alternatives they have submitted,” Dominguez added.
Dominguez said he had told members of the SSS board several months ago to “come up with some kind of a way forward because they cannot stay where they are.”
Last week, SSS president and chief executive Emmanuel F. Dooc told reporters the Social Security Commission (SSC) would approve the increase in the contribution rate to more than 12.5 percent to coincide with the implementation in January of the first package of the tax reform program that would reduce personal income tax rates.
In January this year, President Duterte approved a two-stage monthly pension increase of P2,000, of which P1,000 a month had been been disbursed to each pensioner since March.
The President also ordered that SSS members’ contribution rate be adjusted upward in increments of 1.5 percentage points per year until 2020 when it was expected to reach 17 percent from the current 11 percent.
The SSS was unable to implement the contribution rate increase initially set for May, as it had to wait for the passage of the first tax reform package.
But last Thursday, SSS chair Amado D. Valdez said the SSC was “still studying the possible implementation of the monthly contribution rate increase and its effects.”
“The contribution increase is our last option. However, should the institution be pushed to do it to secure the fund life of the SSS and for the benefit of our members and pensioners, we would like to assure the public that the contribution rate increase would be kept at the minimum amount.”—BEN DE VERA