The Social Security System (SSS) presented its position during the deliberations of the House Committee on Government Enterprises and Privatization (CGEP) for the P2,000 pension increase and the rationalization of the powers, duties and accountabilities of the Social Security Commission (SSC) during its meeting on September 7, reiterating its position that increase in SSS pensions is possible as long there is a sustainable source of funding.
CGEP members of the House of Representatives agreed to adopt the committee reports of the CGEP involving the same or similar legislative measures previously approved by the 16th Congress.
SSS Chief Actuary and Senior Vice President George S. Ongkeko, Jr. said that the SSS has always been supportive of the proposal to increase SSS pensions as long as provisions on the additional sustainable source of funding will also be included to avoid the shortening of fund life.
“We are one with legislators in their desire to provide higher pensions for SSS pensioners. However, we also have to look after the welfare of other SSS members and ensure that the SSS fund life is intact,” said Ongkeko.
The proposed P2,000 pension increase would require about P56 billion for the first year of implementation. The SSS expects this required amount to rise as the number of pensioners grow every year.
SSS currently pays benefits to about two million pensioners who yearly receive 12 regular monthly pensions and the 13th month pension. Last year alone, SSS paid about P102 billion in pensions.
“Granting higher pensions without the parallel implementation of provisions on the source of funding can result in billions in annual net losses for the system, especially for proposals such as the P2,000 pension increase,” Ongkeko said.
The 2015 actuarial valuation shows that the contribution rate must be increased to at least 17 percent to implement the pension increase while maintaining the financial status of SSS. At present, SSS funds are projected to last until 2042 but will be shortened to 2025 if the increase will be effected without the additional source of funds.
“We made computations for all the different legislative proposals on the across-the-board pension increase. All of it, including those with proposed gradual or staggered pension increases, should have a corresponding increase in contribution or an additional and sustainable source of funding,” said Ongkeko.
For instance, every P500 pension increase requires a 1.5 contribution rate increase equivalent to an average of P5 additional contribution every day.
Representative Prospero Pichay Jr. from 1st District of Surigao del Sur said that instead of the contribution rate increase, he is looking at the government providing subsidy to SSS to cover for the huge pension hike being proposed.
“SSS contributions were money entrusted by the people to SSS, hence, the need to protect it. Pag nagsara ang SSS, maybe, the Congress will be blamed,” he said during an interview with reporters after the committee meeting.
“We are also amenable with the proposal of Congressman Pichay for government subsidy. We have always supported any benefit increase provided there is a sustainable source of funding,” said Ongkeko. In his presentation, Ongkeko showed actual cases of SSS pensioners who have received pension benefits that were 29 to 35 times of their SSS contribution.
Aside from the pension increase, the committee also tackled the proposal to rationalize the powers, duties and accountabilities of the SSC to equip it with the tool to address the political, social and economic challenges confronting the SSS. The SSC is comprised of representatives from the employer and labor sectors, the government and the general public.
Based on House Bill 2158, the SSC will have the authority to fix and determine the minimum and maximum monthly salary credits, the schedule and rate of contribution, condone penalties imposed on contributions and loan amortization, and amend the penalty for delinquent contributions without the need for prior approval of the Philippine President.
“With these twin bills, SSS will have a cushion which will enable it to implement the clamor for pension increase and at the same time, effect the necessary changes to have additional source of funding to avoid the depletion of SSS fund life,” said Ongkeko.
There are a total of 15 bills filed proposing an increase on the monthly pension of SSS pensioners and nine bills proposing various amendments to the SSS Charter.