The country’s chief economist is amenable to the proposal of the Social Security System (SSS) to postpone the implementation of the second tranche of the pension increase, initially scheduled next year.
Socioeconomic Planning Secretary Ernesto Pernia told the Inquirer that the SSS plan to add another P1,000 to pensioners’ monthly benefits starting 2020, instead of 2019, “seems reasonable.”
In 2016, Pernia’s National Economic and Development Authority (Neda), Budget Secretary Benjamin Diokno and Finance Secretary Carlos Dominguez III cautioned against the immediate grant of the proposed P2,000 across-the-board increase in pension benefits.
Members’ contribution
They advised President Rodrigo Duterte to approve the grant only if there was a corresponding increase in members’ and employers’ contributions.
The President fulfilled his campaign promise to raise SSS benefits, but only approved the first tranche of P1,000 last year. As a result, the agency’s net income fell 37 percent to P20.3 billion.
While the agency’s revenues grew 15 percent to P200.5 billion last year, expenditures jumped 27 percent to P180.2 billion mainly due to the pension increase, disbursements for which amounted to P33.5 billion.
Shorter fund life
Last week, SSS president and chief executive Emmanuel Dooc warned that implementing the second tranche of the pension hike next year, as promised by the President, would cut short the fund life to only until 2026.
After that, the SSS will no longer have funds to disburse benefits, he said.
The fund life of the SSS was already slashed by 10 years to 2032 from 2042 previously when the additional P1,000 a month were disbursed to pensioners.
The SSS wants to raise members’ contribution rate by up to 14 percent this year, from 11 percent, to ease the impact of the pension increase on its fund life.