THE Social Security System (SSS) on Monday said delaying the “long overdue reform,” including a hike in member contributions, will only worsen an already dire financial situation of the institution.
At a hearing of the House Committee on Public Accounts, SSS President and Chief Operating Officer Aurora Ignacio said the approval of House Bill 8512—temporarily suspending the members’ contribution increase, originally scheduled this year, will imperil the sustained benefit payments to members, rather than strengthening the SSS fund.
“The position of the SSS is not to conform to the requested or the proposed deferment simply because it is going to be a threat to the solvency of the unfunded liabilities of SSS,” Ignacio told lawmakers.
“This will, more or less, weaken the position of SSS rather than strengthening the fund for the members. At the outset, it will bring more difficult times for SSS as regards the threatened solvency on the unfunded liabilities,” she added.
With this, Ignacio said resources are insufficient to enable the SSS to support the system for the next generation of pensioners.
“In 2045, this is the year when the net revenue or the contributions and the income, will be less than the benefits and the expenses. In short, the fund will become negative to cover the benefits and the expenses given the age of the contributing members and the increase in the retirement age of our pensioners,” she said.
Ignacio also said they are also looking at the fertility rates of SSS members, affecting its fund.
In 1980, she said there were about nine workers to one pensioner ratio.
“In year 2020, there are about six workers to one pensioner in ratio and in 2050—because of the aging population and decreasing fertility rates—there will be three workers to one pensioner,” Ignacio said.
“Right now, the working population is subsidizing much of the pension that the pensioners are receiving. Now many families have only two [children] compared [to] before [when there were] 4 to 8 children in the family,” she said.
In filing House Bill 8512, Speaker Lord Allan Velasco said the temporary suspension of the hike in SSS contributions will help the workforce achieve faster recovery from the impact of the Covid-19 pandemic.
Notwithstanding the good intention of the scheduled increases in SSS contribution rates under RA 11199, Velasco said it must be suspended while the country faces a national public health emergency.
“We are witnesses to the negative impact of this Covid-19 outbreak,” and given this, he said “the sovereign government must be given the prerogative to bend the rules of the social security law in favor of the greater good.”
He said that increasing the rate of contributions of SSS members will “strikingly undermine the recovery effort of everyone suffering from job losses, wage reduction, business closures, and health-related issues.”
However, Ignacio disclosed that SSS stands to lose over P41 billion worth of contributions if the scheduled increase in contribution rate is shelved.
P41.4-billion loss
She cited projections of a loss of P41.37 billion in 2021 contributions if implementation of the contribution increase is suspended.
Also, she said, the small scheduled increase in contributions would be equivalent to around P41 billion of benefits and loans to 3.3 million beneficiaries. This amount should continue to enable the SSS to grant even more benefits and loans for the greater good of the SSS membership, both present and future.
“We submit that the additional peso contributions are relatively small, ranging from P15 to P100 for employed members, from P30 to P200 for self-employed and voluntary members and from P80 to P200 for OFW members,” she added.
According to Ignacio, the predetermined contribution schedule is a long overdue reform which will 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,” she added.
“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,” Ignacio said.
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