PRESIDENT Duterte approved a P1,000 pension hike for Social Security System (SSS) members effective in February, presidential spokesman Ernesto Abella said yesterday.
Abella said the President also approved a 1.5 percent increase in the contribution of members starting May this year, which would raise the current contribution to 12.5 percent from 11 percent.
“In peso value, the additional total contribution will range from P15 to P740 equally shared by employer and employee,” he said.
He said the pension hike will be funded by the contributions of active members and the investments of the SSS reserve fund.
There are about 30 million active SSS members and two million SSS pensioners.
The maximum monthly salary credit (MSC) was also adjusted to P20,000 from the current P16,000 by May 2017.
Abella said the President is against the use of taxpayers’ money to fund the pension increase since the SSS is a private pension fund.
He, however, assured that despite the hike, the fund life of the SSS is expected to be until 2040 provided that an increase in members’ contribution is implemented. The total assets of SSS at present stand at P487 billion as of October 2016 and, without the pension hike, its fund life is good until 2042.
SSS chairman Amado Valdez said the P1,000 increase this year is the first tranche of the two-tiered pension hike, with the second tranche of P1,000 expected to be implemented by 2022 or even earlier “subject to conditionalities.”
SSS President Emmanuel Dooc assured that the agency has enough funds to support the pension hike that was supposed to start by January.
Dooc said SSS will still determine how much of the increase will be shouldered by the employer and the employee. He said one proposal is to adopt the current 70 percent-30 percent contribution sharing of employer-employee.
Abella defended the contribution increase saying that it should be looked at as long-term savings for the active members instead of an additional expense.
He added that actively paying SSS members also still enjoy benefits and loan privileges.
Abella said to further strengthen the fund stability of SSS, the agency had been instructed to pursue legal action plans to reduce contribution delinquency through better collection delinquent and non-compliant employers.
Dooc said the SSS collections had been “weak” but refused to give an estimate.
Valdez said the legal actions include issuing summons and holding delinquent and non-compliant employers in contempt if they refuse to heed the call of SSS.
He said employers may also be arrested and prosecuted if proven that they been remiss and had even used the SSS contributions of the workers for other purposes. He said employers who fail to remit or withheld the contributions of employees may be liable for estafa.
Valdez and Dooc acknowledged that some employers may not be able to remit all the contributions as well as loan payments of their employees, especially if it involved years of payment, and is looking at a possible condonation of interest payments.
Dooc said SSS is also looking at some executive interventions to help improve collection, one of which is the issuance of an executive order requiring an SSS clearance for any companies that would seek to join public bidding for government projects, or companies that would apply or renew their business licenses and permits. The SSS clearance would prove that the companies are paying and capable of paying their employees contributions.
The President’s economic managers initially opposed a pension hike as it may shorten the fund life of SSS.
Valdez reiterated the plans of the SSS to diversify assets by directly investing up to 25 percent ownership in a wide range of industries, including infrastructure projects like toll roads, real estate and even lotto operations.
He said the SSS has cut down its operating expenses in its 2017 budget by P1 billion as it seeks measures to improve its performance and address the existing structural imbalance in funding.
He said the compensation and performance-based bonus of SSS officials have been capped not only for SSS but across all GOCCs with the enactment of the GOCC Governance Act and Executive Order 24 in 2011. – With Angela Celis