SSS won’t use premium hike to fund increase in pension
Valdez declares:
Revenues from the impending hike in Social Security System’s (SSS) contribution rates will not be used to fund the higher monthly pension recently approved by President Rodrigo R. Duterte, the pension fund’s ranking official said.
In a statement, Amado D. Valdez, Social Security Commission chairman, said the R1,000 increase in SSS pension effective this month will be funded by current contributions and investment income.
Valdez’s statement came after Senate President Pro Tempore Franklin Drilon said the hike in contributions is “invalid and illegal,” citing Republic Act No. 8282 or the Social Security Law prohibiting SSS to recommend increase in benefits requiring an increase in contribution.
But Valdez said the additional contribution hike by May this year will be used to enlarge the Investment Reserve Fund, to generate higher yields for investments, and to further strengthen the viability of the pension fund for future obligations.
Valdez also stressed that the SSS is mandated to promote social justice by providing meaningful benefits to its members when they retire.
The SSS earlier supported Duterte’s decision to approve an across-the-board pension increase of R2,000 that would benefit over two million pensioners, with the initial R1,000 increase effective this month and another R1,000 in 2022 or earlier.
However, Duterte instructed the SSS to raise its contribution rate by additional 1.5 percentage point and lift the maximum monthly salary credit (MSC) to R20,000 from the current R16,000 by May, 2017.
Duterte said that “SSS should be seen as long-term savings and not an expense,” adding that actively-paying members enjoy six types of benefits and loan privileges.
The President added that legal enforcement of the SS Law will be strengthened through issuance of Executive Orders to ensure social protection of workers.
Valdez thanked the President on his decision to grant the pension hike. He also acknowledged the assistance of economic managers and lawmakers who showed concern for SSS pensioners and members.
“His decision to implement the pension increase with a corresponding contribution hike and increasing the MSC limits supports the continuing reforms in SSS to consider the welfare of the greater population of over 30 million members,” Valdez said.
Once implemented, the combination of additional contributions and increasing the MSC ceiling would put the SSS lifespan at 2040 as of 2017.
Valdez concurred with the chief executive’s pronouncement that the taxpayer’s money should not be used to fund the SSS pension hike.
“He is being responsible when he said the government should not subsidize the pension hike because SSS is a private pension fund by nature and it is unfair for taxpayers to shoulder increases in SSS benefits,” Valdez said.
To help fund the proposed pension hike, Valdez said SSS will also intensify its collection efforts and improve its collection efficiency by going after noncomplying employers.
Another strategy to improve revenues is in the area of investments.
Valdez reiterated SSS plans to diversify assets by directly investing in up to 25 percent ownership in a wide range of industries, including infrastructure projects like toll roads, real estate and even lotto operations.
On the issue of operating expenses, Valdez said that SSS has cut down its operating expenses in its 2017 budget by R1 billion as it seeks measures to improve its performance and address the existing structural imbalance in funding.
Valdez also responded to issue of salaries and bonuses of SSS officials which have been the subject of criticisms in debates around the pension hike issue.