Anatomy of the SSS pension hike
During the campaign period, Candidate Duterte promised to increase the monthly pension of the retirees covered by the Social Security System by R2,000. This garnered him brownie points considering the unpopular action of then incumbent President Simeon Aquino III of vetoing the legislated measure to provide the same increases. President Aquino preferred to be right rather than popular as well as other presidential candidates who knew that such a move meant making SSS bankrupt unless there would be a sustainable and continuing infusion of contributions.
Fast forward to President Duterte, who has now approved a two phased increase – R1,000 beginning January of 2017 and another R1,000 by 2018 despite the advice to the contrary by the economic managers. The sustainability is assured with the parallel increase in SSS contributions by both employer and employers of 1.5 percent, raising the contribution rate from 11 percent to 12.5 percent. President Duterte added more benefits by increasing the monthly salary credit from R16,000 to R20,000.
According to Palace Spokesman Ernesto C. Abella, the president approved the measure as he seeks to fulfill a social contract with the Filipino people, especially the elderly and the poor, who gave their best years of their lives in service while exercising fiscal responsibility to sustain the economic sustainability and protect the gains made by those who have prudently invested in the nation's future.
Reality bites in with the subsequent statements of SSS President Emmanuel Dooc that the R1,000 increase will be by February and Chairman Amado D. Valdez that the 1.5 percent increase will be on a yearly basis until the contribution rate reaches the threshold of 17 per cent, the rate approved by the economic managers. He however offered the possibility of giving the remaining R1,000 increase by 2018 not 2022 and stop the 1.5 percent yearly contribution below the threshold depending on the result of internal reforms. These reforms include legal action plans to reduce contribution delinquency; aggressive prosecution, settlement facilitation and speedy disposition of cases; close coordination with the Department of Justice, etc. I wonder why improving the investment yield as while as cutting agency costs was not listed as part of the internal reforms?
In fulfilling a campaign promise President Duterte has increased the burden of present employers and employees to make life better for those who during their productive years as well as the companies who benefitted then did not set aside funds to ensure that better future. While claiming that being a private pension fund the government can not use taxpayers' money to fund a government decision, yet without the approval of the present employee and employees, government mandated the increases.
If the government wanted to help the SSS pensioners, it should not do so to the detriment of existing workers and employers. It should fund it from the national budget as a social support measure while additional benefits will be funded by those who have worked for it. I am sure the additional contribution rate will not be as much as what is being proposed since it will cover only the future benefits of present workers.
It may also be time to revisit the SSS so that as a purely private pension fund its control should lie with the private sector not the government. If government intervenes to raise benefits, let government pay for it. Politicians should not earn voters' approval by drawing from private sector resources. Why not lower the perks of the legislators and direct the savings to the SSS for this announced measure?
In fact it is more realistic to encourage companies to have their own private pension funds whose benefits can be substantially bigger and better than SSS's and exempt them from SSS coverage. The remaining SSS can cover companies that cannot support a private pension fund as well as those that voluntarily want to be a part. This is fair and right.
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