SSS: Contribution rate hike to raise members’ savings, retirement benefits
MANILA, Philippines – Alongside the contribution rate hike to 12 percent starting this April 1, the Social Security System (SSS) on Tuesday said members will also enjoy bigger retirement benefits given the higher savings rate provided under the state-run pension fund’s new charter.
“It is high time to adjust the contribution rates and monthly salary credits (MSCs) of SSS to allow members to save more for their retirement,” SSS officer-in-charge Aurora C. Ignacio said in a statement.
Next month, the contribution rate will rise by 1 percentage point from 11 percent at present, while the maximum and minimum MSCs will also increase to P2,000 and P20,000, respectively, from the current P1,000 and P16,000.
This was provided under Republic Act (RA) No. 11199 or the Social Security Act of 2018 signed by President Rodrigo Duterte last month.
RA 11199 allowed the Social Security Commission, the governing board of SSS, to jack up the contribution rate by 1 percentage point every other year starting 2019 until it reaches 15 percent.
Previously, only the President can green-light SSS contribution rate adjustments.
As such, this year’s contribution rate hike will be followed by increases to 13 percent in 2021, 14 percent in 2023, and 15 percent in 2025.
The 12-percent contribution rate taking effect on April 1, 2019 will be based on MSC.
Ignacio said the higher maximum MSC will pave the way to a better benefit package for SSS members.
“The good news is that those who will save more with the SSS under the new maximum MSC of P20,000 will have higher amount of benefits and loan privileges as the MSC is one of the main factors used in the computation of benefits and loan privileges. For example, a member whose monthly salary is P20,000 and has paid 12 contributions in the 12-month period before the semester of contingency of sickness will enjoy P600 in sickness benefit per day from the current P480 per day,” Ignacio explained.
“Similarly, another member who has paid the minimum 120 contributions at the old maximum MSC of P16,000 will have a basic monthly pension of P6,400. If the member pays under the new maximum MSC of P20,000, the member’s new basic monthly pension will increase to P8,000,” she added.
“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more. The SSS is the cheapest and most accessible pension scheme. All workers, regardless of nature of employment, must save in the pension fund for their future retirement years,” Ignacio also said.
For SSS, the increase in contribution rate remained “reasonable” as employees with a monthly salary of at least P10,000 will only have to shell out an additional P36.70 for their contributions, while employers will add just P63.30 to their current share.
Under RA 11199, employers must shoulder two-thirds of the new contribution rate.
For the long term, the contribution hike will allow SSS to extend its fund life to 2045 once fully implemented or when the rate reaches the maximum 15 percent by 2025.
To recall, the fund life was slashed by 10 years to 2032 when the additional P1,000 a month were given away to pensioners since 2017, a campaign promise of Mr. Duterte.
SSS expects to collect an additional P31 billion a year from the higher contribution rate.
“We hope that our members will understand the importance of adjusting contributions to make sure that the pension fund remains strong and viable for the current and forthcoming generations,” Ignacio said. /kga
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.