Hike in SSS members’ contribution a band-aid solution, employers say
The Employers Confederation of the Philippines (Ecop) said the planned increase in the contribution rate of Social Security System (SSS) members was a “short term band-aid solution” that would just be a burden on employees.
Ecop president Donald Dee told reporters on Friday that the planned increase starting next year was an “additional cost” that employers would oppose. He said that a position paper would be sent to the government next month.
This comes as the SSS announced it was considering jacking up next year its members’ contribution rate to 12.5 percent of monthly salary from its current level of 11 percent, enabling the pension fund for private sector workers to cover the increased pensions of retirees.
“Obviously, we are not in favor of this. This is additional cost. This is band-aid solution. We should look at how efficient its investments have been,” Dee said without expounding.
Earlier this year, President Duterte approved a two-stage monthly pension increase of P2,000. Pensioners started getting the first P1,000 per month in March.
Duterte 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.
“You can’t just do a short term thing. That would just be passed on to members,” Dee said.
When asked if there was an alternative that Ecop was proposing, he said it was “not their role” to come up with it. Nevertheless, he said they would submit a position paper in November.
Of the 11 percent contribution rate, employers cover 7.37 percent while the employees account for the remaining 3.63 percent.
The SSS was not able to implement the increase in May as earlier planned as it had to wait for the passage of the first tax reform package, which would increase the take-home pay of employees starting 2018.
Without increasing the contribution rate, the SSS’ actuarial life would be reduced by 14 to 17 years to 2025-2028 from 2042, based on 2016 estimates. According to SSS president and chief executive Emmanuel Dooc, the rate increase would extend SSS’s actuarial life to 2049-2051.
