The Social Security System (SSS) belied claims that higher contribution collection will address the threat on the possible bankruptcy of the agency if the P2,000 pension increase is implemented without any additional source of funding given the high returns on every peso contribution to SSS.
“Better collection will cushion the impact of the P2,000 pension hike but this will only be temporary. We really have to increase the low contribution rate of 11 percent and the ceiling of P16,000 monthly salary credit (MSC) to address the pension problem long-term,” explained SSS President and Chief Executive Officer Emmanuel F. Dooc.
Dooc explained that at current rate, every P1.00 contribution to SSS earns at least P16.00 because of its defined-benefit system. This means that once a member starts contributing, he is assured of SSS benefits based on certain conditions.
“We have to make sure that funds are available for every member, regardless if they are actively paying or not, because membership to the pension fund does not lapse,” he said.
SSS has doubled its efforts to increase contribution collections in the past recent years. As a result, starting 2012, contribution collections alone could fund benefit payments and operating expenses without using investment income.
As of October 2016, SSS has collected a total of P119 million, or an 8.2 percent increase from the P110 million collection for the same period last year. Out of the total collection, P103.37 million were remitted by employed members with a 7.9 increase from its collection for the same period last year.
The agency has also intensified its campaign to lower employer delinquency using the full strength of the law. Since 2010, SSS was able to secure 41 employer convictions with a corresponding collectible delinquency of P61.66 million.
Dooc, however, was quick to note that there are plans to improve contribution collections under the new management. “We have forged agreements with state-run agencies for self-employed coverage of job order and contractual hires excluded from the pension scheme for government employees. We also expanded payment facilities to make it easier for individual-paying members to remit their monthly contributions,” he said.
In light of the current clamor for a pension hike, SSS is pushing for continuous reforms on the pension program such as increasing the MSC to P20,000 from the current P16,00 as well as increasing the contribution rate to 17 percent from the current 11 percent on a staggered basis or a 1.5 percent contribution rate increase every year for the next four years.
Unlike the Government Service Insurance System (GSIS) which applies its 21 percent contribution rate on the entire income of public sector employees every month, SSS implements a much lower 11 percent contribution rate that covers a maximum monthly income of only P16,000.
“We want a win-win solution for everyone. We will give the pension increase but we have to make sure that future benefits will not be compromised,” said Dooc.