Despite pandemic, SSS contribution rate hike a go in 2021
MANILA, Philippines—Despite the COVID-19 pandemic that shed millions of jobs and shuttered thousands of businesses, the state-run pension fund Social Security System (SSS) on Monday (Dec. 7) said the scheduled increase in contribution rate to 13 percent from 12 percent at present will push through in January 2021.
SSS president and chief executive Aurora C. Ignacio issued four circulars on the new schedule of SSS contributions for employers and employees, the self-employed, voluntary members and non-working spouses, as well as household employers and their helpers, or kasambahay.
The bigger contribution rate meant employees and employers would shell out more for their SSS membership despite the tougher times wrought by the pandemic-induced recession.
Republic Act (RA) No. 11199, or the Social Security Act of 2018 signed by President Rodrigo Duterte in 2019, allowed the Social Security Commission (SSC) — the SSS’s highest governing body — to jack up contribution rate by 1 percentage point (ppt) every other year starting 2019 until it reaches 15 percent.
Previously, only the President can approve contribution rate adjustments.
The contribution rate hike to 12 percent (from 11 percent previously) which took effect last year will be followed by increases to 13 percent next year, 14 percent in 2023, and 15 percent in 2025.
Alongside the increase in the contribution rate, the SSS will also implement in 2021 the mandatory hike in minimum monthly salary credit (MSC) to P3,000 from P2,000 at present, and the maximum MSC to P25,000 from P20,000.
Ignacio said these adjustments in the contribution rate and minimum and maximum MSCs were approved by the SSC in a resolution last Nov. 4.
The SSS had to push for legislation amending its charter and allowing the SSC to hike the contribution rate after its fund life was slashed by 10 years to 2032 when an additional P1,000 a month were given to pensioners starting in 2017—campaign promise of Duterte.
Even as the SSS struggled to maintain its fund life, Duterte did not increase the contribution rate back then despite having the power to do so in order to keep the pension fund afloat.
With RA 11199 in place, the SSS’s fund life had been extended, currently projected to last until 2045.
However, as the SSS delayed collections of members’ contribution payments amid COVID-19 quarantine, the pension fund shed revenues and saw its net income drop 8 percent to P28.6 billion as of end-September, the Inquirer had reported.