Duterte’s aides propose 17% hike in SSS contribution
MANILA—In exchange to the proposed P2,000 two-step, across-the-board increase in the Social Security System (SSS) monthly pension, its members should raise their contributions from the current 11 percent to 17 percent.
The Department of Finance said this was the recommendation of the economic managers to President Rodrigo Duterte in order to save the pension fund from bankruptcy.
In a Dec. 15 memorandum to the President, Finance Chief Carlos Dominguez III and Budget Chief Benjamin Diokno, along with Neda Director-General Ernesto Pernia, fretted that without any accompanying “upward adjustment of the contribution rate,” the proposed pension hike would unduly jack up the unfunded liabilities of the SSS from P3.5 trillion to P5.9 trillion.
If approved, this congressional proposal “may adversely affect the Republic’s credit rating,” said the three Cabinet secretaries in their memo to Duterte, and the “SSS would be bankrupt and left with no funds for other members in the future,” the DOF said.
Although the government is ready to keep the pension fund viable by way of a subsidy in case the SSS finds itself in dire financial straits, the secretaries said that this should merely be a “last resort,” because it remains the primary responsibility of member-employees and their employers to keep it afloat, not only for their benefit, but for future generations of members as well.
The secretaries were reacting to a proposal by the Congress for the SSS to implement a staggered P2,000 across-theboard increase in its monthly payments to member-pensioners now numbering 2.2 million—the first tranche of P1,000 to be given starting in January 2017 and another P1,000 in January 2019.
Without a corresponding increase in member contribution, they said the proposal would cut the actuarial life of the pension fund by 14 to 17 years from 2042 to 20252028 because the SSS will have to cough up an additional P32 billion annually to cover the initial P1,000 hike and P62 billion for the entire P2,000 increase in monthly payments.
“While we recognize the thrust of the joint resolution to promote the well-being of the private sector retirees…...any increase in pension without increasing member contribution would introduce severe fiscal issues,” they said.