SSS: Contribution hike in 2021 to ensure increase in member benefits and pension fund viability

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Metro Manila (CNN Philippines, December 23) – The Social Security System or SSS is set to implement a 1% hike in members' monthly contribution effective this January.

Finance Secretary and Social Security Commission Chairman Carlos Dominguez III said the monthly contribution will increase to 13% from the current 12%, but will not exceed the prescribed maximum monthly salary credit or MSC.

The SSS contribution hike caused the minimum MSC to be raised to ₱3,000 from ₱2,000, while the maximum MSC will go up to ₱25,000 from ₱20,000. The commission clarified the minimum MSC for Kasambahay and Overseas Filipino Workers members will remain at ₱1,000 and ₱8,000, respectively.

Dominguez assured the public the SSS monthly contribution hike next year will ensure the long-term viability of the social pension fund and increase the benefits enjoyed by its members.

The SSC Chairman added the full implementation in 2025 of the restructured rates and other related reforms under the Social Security Act of 2018 "will offset the adverse financial impact of the ₱1,000 pension increase granted in 2017."

"Any drop in collections may lead to cash flow and liquidity issues. This could endanger the SSS' ability to provide its members and their beneficiaries with benefits and loan privileges," Dominguez said.

"Per our last evaluation, the fund life of SSS is projected to be [until] 2054," SSS Chief Actuary Atty. Edgar Cruz said in a briefing last month.

Cruz said that an additional ₱1,000 increase in monthly benefits will shorten the fund life by ten years if there is a lack of proper funding, adding this will "make future generations suffer."

Among the reforms introduced in the new law is the provision of Unemployment Benefit for members involuntarily separated from their jobs and the extension of the MSC cap for the computation of benefits to ₱20,000.

In a separate interview with CNN Philippines, Cruz said the SSS program on expanded maternity leave would also be funded by the scheduled increases.

"Naiintindihan po namin na nasa panahon tayo ng pandemya at paghihirap. Pero kung tutuusin po, yung pong pagbababgo ng rates, hindi naman po kalahihan," he said.

[Translation: We understand we are in a pandemic and some are having difficulties. But the increase in rates is not that big.]

As an example, Cruz said an average worker earning ₱10,000 a month would only pay an additional ₱50. He added the only ones affected by the increase are the ones who are employed and are able to contribute.

"Konting sakripisyo lang ang hinihingi namin. Pero yung dagdag seguridad nito sa mga miyembro, sa mga pensyunado, at sa mga benepisyo ng SSS ay hindi po natin mapapantayan," said Cruz.

[Translation: We are asking for a small sacrifice. But the added security for members, for pensioners, and the benefits from the SSS are unmatchable.]

The SSS disbursed a total of ₱159.47 billion in social security and employees' compensation benefits to 3.56 million members and beneficiaries from January to October 2020, representing a decrease of 2.6 percent and 4.8 percent, respectively, due to the COVID-19 pandemic particularly between late March and May.

"However, benefit disbursements to SSS members and their beneficiaries started to slowly recover or increase in the following months with the easing of quarantine restrictions and continuous digitization of the SSS system," said the Finance Department in a separate press release.

Meanwhile, SSS contribution collections from January to October only totalled ₱169.73 billion, which was 5.4% lower from the ₱179.34 billion collected in the same period last year.

The Finance Department added that member loan releases from January to November reached ₱58.03 billion for 3.20 million members, a 54.5 percent year-on-year spike. Meanwhile, ₱3.17 billion in pension loans were released during the period, up by 61 percent from last year.