The state-run Social Security System (SSS) is concerned that the implementation of reforms needed to sustain the fund’s life following a pension hike last year, specifically the planned increase in contribution rate, may be delayed to the second quarter as Congress prioritizes other matters, including the impeachment of Supreme Court Chief Justice Maria Lourdes Sereno.
Emmanuel F. Dooc, SSS president and chief executive officer, told the Inquirer that the hike in contribution rate, which the Social Security Commission SSC could implement under the proposed amendments to the pension fund’s charter pending Senate approval, could be enacted into law “hopefully after Congress resumes its session following its Lent break.”
“The committee report is now being prepared, but it has been stalled by the ongoing Senate investigations which have occupied our senators’ priority,” Dooc said in a recent text message. “We have full trust in Sen. Richard Gordon’s legislative skills and leadership that he would successfully steer it through the plenary and the bicameral conference. We also expect the same support from the leadership of the Housewhich passed the counterpart measure early last year.”
“The looming impeachment trial in the Senate may also upset our timelines,” Dooc added.
Charter amendments may still be passed soon
But he expressed confidence that once the SSS charter amendments could be passed in Congress, the Social Security Commission coulds “act on it immediately” so that the contributiion rate hike could be implemented soon.
In September, Dooc said the SSC would likely approve the increase in the contribution rate to over 12.5 percent early this year to coincide with the implementation of the first tax reform package that slashed personal income tax rates, hence providing employees with a higher take-home pay.
The SSS was unable to implement the contribution rate increase as initially scheduled in May last year as it awaited passage of the Tax Reform for Acceleration and Inclusion (Train) Act.
President Rodrigo Duterte had ordered that the SSS members’ contribution rate to be raised in increments of 1.5 percentage points per year until 2020 to reach 17 percent from the current 11 percent.
The contribution rate hike is necessary because the actuarial life of the SSS will be reduced by 14-17 years to 2025-2028, from 2042 based on 2016 estimates, if members’ contributions will not be increased.
In January last year, Duterte approved a two-stage monthly pension hike of P2,000, of which P1,000 per month was already being disbursed to pensioners since March.
Pension increase cuts net income
The latest SSS data showed that its net income plunged to P9.69 billion as of end-November last year mainly because of the pension increase.
In a statement Sunday, Dooc said that the pension fund’s revenues grew 9.3 percent year-on-year to P174.94 billion in the first 11 months of 2017 “primarily due to the collection drive of the current administration of the Social Security Commission along with the efforts of SSS employees who are in direct contact with our employer- and employee-members every day.”
Contributions from members comprising over four-fifths of total revenues increased to P144.36 billion, while investment and other income rose to P30.58 billion.
“Total investments, representing 92.6 percent of the pension fund’s total assets, rose by P16.68 billion due to additional placement in government bonds, new salary loans releases including restructured member loan accounts, and the reclassification of real estate properties,” Dooc said.
Increased benefit disbursements
However, end-November expenditures increased at a faster pace, as benefit payments jumped 27.8 percent to P157.39 billion from P123.17 billion a year ago, “hiked up by the P30.85 billion in total releases for the P1,000 additional benefit for pensioners,” the SSS said.
“The pension adjustments arising from the un-lumping of 1985 to 1989 contributions which we began to release to SSS death, retirement and disability pensioners in 2016 correspondingly increased benefit disbursements,” Dooc explained.
“The third and fourth tranches of these pension adjustments that were released in June and September last year in the amount of P72.43 million and P66.92 million, respectively, contributed to the entire amount of benefit payments for that period ended in November,” he added. “Also, the earlier tranches of adjustments released in June and November 2016 have still an effect on 2017’s total disbursements for benefits.”
Retirement benefits from January to November, in particular, climbed by over a fourth to P91.22 billion from a year ago’s P72.56 billion.
While operating expenses slightly declined to P7.86 billion, the profit of SSS further fell during the 11-month period from end-September’s P11.91 billion. /atm