Starting April, the contribution rate for members of the Social Security System (SSS), the pension fund for workers in the private sector, will increase by 1 percentage point to 12 percent.
At the same time, the minimum monthly salary credit (MSC) will go up to P2,000 and the maximum to P20,000. The 12-percent contribution rate is based on the MSC.
The rate increase, which the SSS governing board approved on March 13, is mandated under the pension fund’s new charter to extend the fund life.
The fund life was slashed by 10 years to 2032 after the administration gave pensioners an additional P1,000 a month starting 2017.
With the new law, the SSS fund life is projected to last until 2045.
New schedule
Circular Nos. 2019-05, 2019-06 and 2019-07 published on Sunday listed down the new schedule of social security contributions.
In a text message, Ma. Luisa Sebastian, SSS vice president for public affairs, said that since the higher contribution rate would be applicable in April, contributions to be paid in May must reflect the new rate.
In the circulars, SSS Commissioner and Officer in Charge Aurora Ignacio said the contribution rate increase was pursuant to Republic Act No. 11199, or the Social Security Act of 2018, which President Duterte signed last month.
The law allowed the Social Security Commission, the pension fund’s governing board, to increase the contribution rate by 1 percentage point every other year starting 2019 until it reached 15 percent by 2025.
Before, only the President could approve contribution rate adjustments.
Monthly salary credit up
RA 11199 also raised the minimum MSC to P2,000 from P1,000, and the maximum MSC to P20,000 from P16,000.
Those employed with a monthly compensation of less than P2,250 will have a minimum MSC of P2,000 and must contribute P240 a month, the corresponding 12 percent equivalent.
Employers must shoulder two-thirds of the contribution or P160, and employees, P80.
Those earning P19,750 and above a month have a maximum MSC of P20,000 and will contribute P2,400 monthly—P1,600 from the employer and P800 from the employee.
Self-employed
The contribution rate for the employed will also apply to self-employed and voluntary members.
The contribution of nonworking spouse will be based on 50 percent of his or her working spouse’s MSC.
As for “kasambahay” (househelp) members, their employers need to shell out beginning April between P120 and P600 for those earning P5,000 a month and below. The Kasambahay Law mandates that employers pay the entire contribution.
Kasambahay with monthly compensation of P19,750 and above will have to contribute P2,400—P1,600 from the employer and P800 from the househelp.
For overseas Filipino workers (OFWs) with a minimum MSC of P8,000, the contribution rate ranges from P960 for those earning below P8,250 monthly to P2,400 for those with compensation above P19,750 monthly.
Bilateral labor accords
For sea-based OFWs and land-based OFWs working where the SSS has existing bilateral labor agreements with their foreign counterparts, employers must contribute two-thirds, while the remaining amount will come from the pockets of the OFWs.
At present, the Philippines has bilateral social security agreements with Austria, Belgium, Canada, Denmark, France, Germany, Japan, the Netherlands, Portugal, Spain, Switzerland, Quebec (Canada), and the United Kingdom and Northern Ireland.
But in the case of land-based OFWs working in countries without bilateral labor agreements with the Philippines, the employee will have to pay the full contribution.
RA 11199 provides for mandatory coverage of all OFWs.