Audit changes bloat SSS losses
As Finance Secretary Carlos Dominguez III had forewarned, updated accounting rules widened the Social Security System’s (SSS) net loss by nearly a third to P427.3 billion in 2020, as current and future claims were included in the state-run pension fund’s expenses.
The SSS’s latest audited statements of comprehensive income dated Dec. 3 showed last year’s net loss was 31.5-percent bigger than the P324.8-billion loss in 2019, which was also adjusted using the Philippine Financial Reporting Standards (PFRS) 4 accounting standard.
The SSS’s total expenses last year rose to P681.6 billion from P601.5 billion in 2019.
Its 2020 expenses exceeded the P254.3 billion in total income, which also fell from 2019’s P276.6 billion, no thanks to the pandemic-induced recession which saw employers shed millions of jobs.
Benefit payments to members and pensioners declined to P194.9 billion in 2020 from P196.1 billion in 2019, even as it has been giving away unemployment benefits to affected private-sector workers.
Expenditures on personnel, maintenance and other operating expenses, and other financial and non-cash outlays last year were also lower than 2019’s, but the net change in policy reserves for future payments — required under the new accounting system — rose to P461.7 billion from P388.3 billion.
Dominguez last week said that using PFRS 4 will bloat the liabilities of the SSS, the Government Service Insurance System (GSIS) and Philippine Health Insurance Corp. (PhilHealth). But updated accounting would provide a “more accurate” financial situation of the government’s social institutions, he said.
The SSS’s total liabilities climbed to P6.77 trillion in 2020 from P6.31 trillion in 2019, separate audited statements of financial position showed.
While total assets increased to P639.9 billion, total equity ballooned to negative P6.13 trillion.
Meanwhile, service and business income, which included members’ contributions, dropped to P234 billion from P253.2 billion in 2019.
The SSS saw active, paying members decline last year amid the COVID-19 crisis, but ramped up mandatory membership among overseas Filipino workers (OFWs) and household helpers for financial inclusion.
Amid a rout in local and global markets last year, gains from investments declined to P17.8 billion from 2019’s P21.1 billion.
While the SSS looked in danger given its bigger net loss last year, Dominguez had said the public should not look at the bottom lines of government-run pension funds and insurance institutions as “booking and reporting the social benefit liabilities do not affect the institutions’ cash flow and funding situations.”
Dominguez assured that the SSS, the GSIS and PhilHealth can continue disbursing benefits to members and pensioners. In the case of the SSS, its actuarial fund life — or the estimated depletion period of its assets — was estimated to reach up to 2054.
Also, SSS officials had said year-to-date contribution collections in 2021 improved compared to last year’s amid economic recovery which resumed jobs, plus the increase in monthly contribution rate to 13 percent since January, from 12 percent previously.
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