The Social Security System is planning a gradual increase in the rate of members’ contributions over the medium term to extend the actuarial life of its fund.
For this year, the SSS is preparing to implement an increase in members’ contributions from 10.4 percent to 11 percent of their monthly salary credits. The plan, however, has to be approved by Malacañang.
SSS president and chief executive officer Emilio de Quiros Jr. said that once the proposed hike this year is approved by the Palace, the pension fund will propose a series of increases in the next few years until the contribution rate reaches 14 to 15 percent of monthly salary credits.
“Perhaps we can look at (increasing the rate of contributions) every two years,” De Quiros said.
The proposed hike this year, he said, would extend the actuarial life of the SSS fund 28 years or up to 2039 to 35 years or up to 2046.
De Quiros said the medium- to long-term objective was to further extend the actuarial life of the SSS fund to “perpetuity,” meaning at least 70 years.
He said the existing rate of contribution to the SSS was small compared with those in other countries. The average rate of contribution in Asian countries is placed at 23 percent of salary credits. The rate is higher in Europe at 35 percent.
Increasing the rate of contribution would consequently increase the amount of benefits received by members, he stressed.
The SSS chief said, however, that the implementation of the plan would depend on the performance of the economy. He said the economy should be able to grow as targeted so that the income of employees would rise and be able to afford higher rate of contribution to the SSS.
In the meantime, it was reported that the SSS was planning to set up a provident fund, which will allow members to save more for their retirement than their mandated contributions.