Due to pension hike, SSS profit down 37% to P20.3B in 2017

After President Duterte approved higher pension benefits for retirees, the profit of state-run Social Security System slid 37 percent to P20.3 billion in 2017, data released yesterday by the state-run pension fund showed.

While the SSS’s revenue last year rose by 15 percent to P200.5 billion, expenditures climbed faster by 27 percent to P180.2 billion.

Its net income of P32 billion in 2016 was also 21-percent lower than the P40.7 billion posted in 2015.

The faster increase in expenditures, which included operating expenses, came on the back of the additional P1,000 in monthly pension benefits disbursed last year.

“In 2017, the SSS fulfilled President Duterte’s promise to give higher benefits to our pensioners. We have disbursed roughly P33.5 billion to cover the additional benefit to pensioners starting January 2017. As a result, our expenditures, which were made up largely by benefit payments, saw a huge increase compared to 2016, wherein no additional benefit was enjoyed by the pensioners,” SSS president and chief executive Emmanuel F. Dooc explained.

Total benefit payments—including death, disability, maternity, retirement as well as sickness—jumped 28 percent to P170.7 billion last year.

Last year, President Duterte approved a two-stage monthly pension hike of P2,000, of which P1,000 per month were already being enjoyed by pensioners.

As such, the SSS was seeking President Duterte’s approval of its proposal to jack up members’ contribution rate to 14 percent from 11 percent currently to compensate for the impact of the pension increase on its fund life.

The SSS was unable to implement the planned 1.5-percentage point contribution rate increase as initially scheduled in May last year as it awaited the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The pension fund also sought to raises the minimum monthly salary credit to P4,000 from P1,000 at present, and the maximum credit to P20,000 from P16,000.

The higher contribution rate will allow the SSS to extend the fund’s life to 2044 from the current 2042.

The contribution rate hike is needed as the SSS’s actuarial life would be reduced by 14-17 years to 2025-2028 without the additional funds.

Operating expenses last year also inched up by 0.4 percent to P9.5 billion.

“Our operating expenses are way below our allowable expense under the Social Security Law of 1991, which is equivalent to not more than 12 percent of the total yearly contributions and 3 percent of other revenues,” Dooc noted.

As for the revenue, the SSS exceeded its P189.8-billion goal by 6 percent, mainly as contribution collections grew by a tenth to P159.7 billion.

“We achieved good [revenue] numbers in 2017 on the back of our intensified campaign to increase our collections. We are pleased that the efforts of the SSS management and employees paid off,” Dooc said.

Also, the pension fund’s investment and other income leaped 36 percent to P40.8 billion in 2017.

Moving forward, Dooc said: “We’ll strive to make benefits more relevant while ensuring financial viability through the support of all our stakeholders, especially our legislators, who are now studying the proposed Social Security Charter Amendment Act due for bicameral hearing soon.”