SSS’ 2021 net loss doubled to P843.9B as future liabilities soared
Benefit payments rising amid prolonged pandemic
The Social Security System (SSS) nearly doubled its net loss to P843.9 billion last year, as future liabilities also ballooned using an updated accounting standard showing the real financial health of the country’s social insurance institutions.
The latest condensed statement of comprehensive income of the state-run SSS released on Friday showed that its 2021 net loss widened by 99 percent from the restated P424.4 billion in 2020.
The SSS grew its total income—service and business income mainly from members’ contributions, gains from investments, and other nonoperating revenues—to P276.3 billion last year from 2020’s P257.2 billion.
In particular, service and business income rose 19 percent to P255.3 billion, while gains grew 4 percent to P18.9 billion, offsetting the 19-percent decline in other nonoperating income to P2.1 billion.
However, the SSS’s total income was exceeded by the P1.12-trillion total expenses in 2021, almost two-thirds bigger than the P681.6 billion recorded in 2020.
The much bigger total expenses mainly came on the back of the jump in the change in policy reserves to P872.4 billion last year, from P461.7 billion in 2020. This reflected the future liabilities or benefits to be disbursed to SSS members and pensioners.
New bookkeeping methodology
To recall, Finance Secretary Carlos Dominguez III last year ordered the SSS, the Government Service Insurance System (GSIS), as well as the Philippine Health Insurance Corp. (PhilHealth) to adopt the Philippine Financial Reporting Standards (PFRS) 4 accounting method. Dominguez had explained that PFRS 4 provided a “more accurate” financial situation of these state-run insurers, since it counted future liabilities, unlike in the past when financial statements, while showing profits, hid these obligations.
Despite the negative bottom lines being posted by the SSS, the GSIS and PhilHealth these past two years, Dominguez had assured that they could still pay out their members and pensioners given that these institutions’ cash flows plus funding remained unaffected.
Besides soaring future liabilities, the SSS’s benefit payments to its members also climbed 15 percent to P223.9 billion last year amid the harder times wrought by the prolonged COVID-19 pandemic, alongside increases in expenses for personnel services as well as maintenance and other operating expenses. The SSS nonetheless reduced its financial and noncash expenses in 2021.