SSS appeals for impartial decision
Since the Social Security System (SSS) announced late last year the implementation of a 1-percent increase in contribution rate for 2021, we have received calls for its postponement from various groups—particularly from the labor and employers sectors—as the country is still facing the health and economic crises brought about by the covid-19 pandemic.
Being the primary agency that manages and facilitates the private sector pension fund, we at SSS remains cognizant of our responsibility to our 38.8 million members from the private sector and almost 2.8 million pensioners.
Last Thursday, January 21, 2021, we were invited to attend the House Committee Hearing on Government Enterprises and Privatization chaired by Parañaque Rep. Eric L. Olivarez, to explain our position on several House bills proposing to defer and/or altogether stop the implementation of the increase in member-contribution as authorized under Republic Act 11199, otherwise known as the Social Security Act of 2018.
I was with some of our top officials from the Actuary, Legal and Operations Group to address the matter.
For this column, I would like to share parts of the Opening Statement I read during the committee hearing:
“At the outset, however, we would like to state that the provisions of the bills tend to weaken, rather than strengthen the SSS, especially in these difficult times.
“The SSS, therefore, respectfully expresses its opposition to the proposals because of their expected adverse financial impact to the financial health of the SSS, and eventually, on the benefits of pensioners, members, and their beneficiaries.
“As the Honorable Committee may know, the SSS has implemented various Bayanihan measures as its institutional response to the Covid-19 emergency. These included the extension on contribution payment deadline, advance pension, Covid-19 calamity loan, unemployment insurance benefit and moratorium on loan payments. These have posed considerable strain on our liquidity, with the financial outflows outpacing the inflows.
“Postponing or stopping the implementation of the increase in member contribution will further exacerbate our already dire financial position. Our studies show these actions will lead to the following:
n A projected loss of P41.37billion in Y2021 contributions, increasing annually, in the event of suspension of implementation of contribution increase;
n A projected deficit of P14.90billion in Y2021 (inflow vs. outflow); and;
n Increasing unfunded liabilities that are already running in trillions of pesos.
“We submit that the additional peso contributions are relatively small, ranging between P15 and P100 for employed members; between P30 and P200 for self-employed and voluntary members; and between P80 and P200 for OFW members.
“Pre-determined contribution schedule is a long overdue reform, which will serve to offset the financial impact of improved and expanded benefits that the SSS has provided since 2017. Apart from the emergency Covid pandemic responses, these are the additional P1,000 monthly benefit allowance, expanded maternity benefit and unemployment insurance benefit, with no corresponding additional funding.
“When put together, the minimal scheduled increase in contributions would be equivalent to around P41 billion in benefits and loans to 3.3 million beneficiaries. This amount should continue to enable the SSS to provide even more benefits and loans for the greater good of the SSS members, both present and future ones.
“At this time of the Covid-19 pandemic, when members and pensioners have clamored for heightened benefits, including allowable loans, we would expect that proposed measures should clearly strengthen the SSS, not weaken it financially. Stopping the collection of this considerable amount would clearly weaken our institution established to provide social protection.
“We, therefore, urge everyone to join us as we take a long hard look at our fiduciary duty to shore up the capacities of the SSS, and continue to effectively secure our members in times of unwanted shock situations and contingencies, through a responsive lifeline they themselves created and maintain through their hard-earned contributions.”
At this point, I would like to extend our gratitude to the House of Representatives for giving us the opportunity to air our side. We now entrust our case to the President, and will accept whatever decision he may take regarding our appeal. As always, we are good soldiers, ready to follow and take orders as we give respect and honor to authority.
A blessed week ahead for everyone.