SSS faces bankruptcy due to pension hike if member contributions not increased by 54.5%

The Philippine Social Security System might go bankrupt by 2025 if member contributions are not increased by 66%, amid the approved P2000 pension hike by Congress.

The scheduled pension hike  will be implemented with a P1000 increase starting January 2017, and another P1,000 in 2019 at the earliest.

Though the additional pension will benefit around 2.2 million pensioners, it might not sit well with the 12 million actively paying members of SSS if the pension hike might result in increased amount of members' contributions.

Three of President Duterte's cabinet secretaries, namely Finance Secretary Carlos Dominguez III, Budget Secretary Benjamin Diokno and NEDA Director-General Ernesto Pernia, are worried that if members' contributions are not raised, the pension fund will only last up to 2025-2028. That's a far cry from the actuarial life of the fund which is until 2042, if no pension hike is implemented.

A bankrupt SSS would not only deprive other members of funds in the future. It may also prove deleterious to the country's credit rating.

Thus, the three secretaries are suggesting an increase in member contributions from the present 11% to 17% of the salary, in tandem with the pension hike.

The cabinet secretaries must have based their recommendation on the 2015 actuarial valuation presented to legislators by SSS.

Meanwhile, Bayan Muna Rep. Carlos Isagani Zarate criticized the proposal of the Dominguez, Diokno, and Pernia. Zarate is one of the principal authors of the House Joint Resolution No. 10 re the pension hike.

He noted that SSS Chairman Amado Valdez himself sees the increase in membership premium as a last resort for funding the pension hike and instead looks at government subsidy as a better option.

Bayan Muna Rep. Neri Colmenares chimes in, saying that it isn't true that the funds are not available. He says the pension hike will shorten the SSS fund life but there's enough time for the government to lengthen the fund life of SSS. Colmenares suggested more efficient collection of members'contributions, collection of contributions from delinquent employers, cutting down perks and bonuses of SSS board members, and collection of fines from employers penalized by the court.

The Bayan Muna representative also pointed out that Congress can provide subsidies based on Section 20 of amended RA 8282 (Social Security Law). He said that the government guarantees that the SSS will never go bankrupt.

Below are Sections 20 and 21 of the Social Security Law, which were cited by Colmenares:

SEC. 20. Government Contribution.!"!As the contribution of the Government to the operation of the SSS, Congress shall annually appropriate out of any funds in the National Treasury not otherwise appropriated, the necessary sum or sums to meet the estimated expenses of the SSS for each ensuing year. In addition to this contribution, Congress shall appropriate from time to time such sum or sums as may be needed to assure the maintenance of an adequate working balance of the funds of the SSS as disclosed by suitable periodic actuarial studies to be made of the operations of the SSS.

SEC. 21. Government Guarantee. The benefits prescribed in this Act shall not be diminished and to guarantee said benefits the Government of the Republic of the Philippines accepts general responsibility for the solvency of the SSS.
However, the three secretaries do not seem to be inclined in granting government subsidies to SSS. They sent a memorandum to Duterte last week, which signified their aversion to government subsidy since it "introduces undue fiscal burden to taxpayers". Further, they said that the public shouldn't carry the burden for the pension hike "which benefits only privately employed individuals."

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