First the good news: private employee pension fund Social Security System (SSS) is optimistic of hitting at least P100 billion in net income this year as it ramps up efforts to improve collection, improve coverage and maintain profitability in its investments.
Now the bad news: the SSS still has a long way to go to improve collection, particularly when it comes to one of its main growth drivers: overseas Filipino workers (OFWs).
In a briefing yesterday, Joseph de Claro, SSS chief executive officer (CEO) and president acknowledged that “there are more than 2.5 million registered OFWs outside the Philippines, but only about a million are registered with the pension fund.”
The SSS is also working with the International Labor Organization (ILO) on how to include people in the informal gig sector, also called the platform economy, in its coverage, De Claro revealed.
And De Claro’s final admission: the pension fund is still coming to grips on how to improve its collection from industries that have been consistently remiss in remitting member contributions.
De Claro said his office is focusing particularly on the construction industry which he said has one of the longest record of delinquencies — improperly reported workers and even salaries.
“It is a mix of factors of improvement, of coverage drives, working with sectors that might need a special type of social protection,” said De Claro.
De Claro stressed the need to encourage people in the gig economy to contribute.
“In my recent meeting with the ILO, we are studying the appropriate coverage for gig workers from a social protection perspective. We are waiting for guidelines from the ILO on how it should be addressed,” he added.
Big improvement
The P100 billion net income target is an improvement over the P89 billion reported last year, De Claro pointed out.
“Definitely, we’ll reach the P100 billion mark in net income for 2025,” he declared. “Last year, we reached about P89 billion and we project to significantly grow in 2025.”
“And that’s why we are confident to embark on this pension reform program because there will be much significant impact in terms of the financial viability of the pension fund,” said de Claro. noting that the SSS’ fund currently has a fund life of 25 years even with the upward adjustment in pension payments, announced late last month.
In late-July, the SSS announced a three-year plan to increase pension that will see pensions increase by approximately 33 percent for retirement/disability pensioners and 16 percent for death/survivor pensioners for the period.
As of end-June the SSS has reported a net income of P90.25 billion, before adjustments for policy reserves. This is an 8.56 percent increase from P83.13 billion last year.
De Claro said that SSS as a rule targets a “modest” increase of 8 percent, at the minimum, in its income growth.
