THE SOCIAL Security System is eyeing to increase its monthly contribution rate at a more relaxed pace as it seeks to extend the fund life of the agency, a top official said.
On Wednesday, SSS President and Chief Executive Officer Emmanuel F. Dooc said under the proposed amendments to the Social Security Charter at the Senate, the contribution rate will be increased by a percentage point (ppt) every other year until it reaches the 15% cap.
Aside from the rate increase, the minimum and maximum salary credit will be adjusted.
“You cannot postpone the contribution rate hike again because our collection from contribution is no longer enough to match the payout,” Mr. Dooc told reporters in a Sept. 26 interview.
“We cannot match our benefit expense. Malaki talaga ‘yung impact ng P1,000 [contribution hike].”
In January last year, President Rodrigo R. Duterte approved the monthly pension increase of P2,000, which will be done in two tranches. The first P1,000 was already disbursed to pensioners since March.
Mr. Dooc added that the P1,000 contribution hike depleted SSS’ funds, making it resort tapping its investment income, which the firm started doing since last year amid growing collections.
“We’re short by how many billion despite the fact that our collection last year grew by 1.6% over 2016… That means, we averaged an increase in collection of about P1.7 billion a month last year. But still, we’re falling short.”
The SSS previously intended to raise its contribution rate by 1.5 ppt on an annual basis until it reaches 17%. It sought to adjust the rate by three percentage points to cover the years of 2017 and 2018.
Currently, the contribution rate of the state-run pension fund is at 11% of the monthly salary credit. It is being shouldered by the employer (7.37%) and the employee (3.63%).
The proposed rate increase, Mr. Dooc said, will enable the SSS to support the planned extension of maternity leave benefits, which will require the pension fund to shell out P3.5-5 billion annually.
“We need a contribution hike by 0.3% if it is 100 days or the lower house version, or 0.4% if it is 120 days or the Senate version just to cover the extra maternity benefits,” he added.
The Congress will conduct a bicameral conference today to consolidate the House and Senate versions of the bill.
The SSS chief added the SSS is “okay” with a gradual rate hike as it does not have any other option.
“We can’t do anything because some [senators] do not even want to increase. Or if they agree, they want it later [since] people are reeling from inflation,” he said.
The additional contribution to be collected will also enable the pension fund to “save some amount to increase [its] investment reserve fund” as it is are earning little due to the “depressed” equity market, Mr. Dooc said.
“Lugi kami ngayon kasi bumagsak ‘yung equity. Historically, equity has provided us a good income next to members’ loan,” Mr. Dooc noted.
The SSS is seeking to hire nine local fund managers to be allotted with P1 billion each. In July, it invested P3 billion in three domestic mutual funds managed by Philequity Management, Inc., BPI Investment Management, Inc. and Sun Life Asset Management Co., Inc. — Karl Angelo N. Vidal