SSS to incur P26-B net loss from pension hike

The Social Security System (SSS) would have incurred a P26-billion net loss if the proposed P2,000 increase in the monthly pension pushed through, officials said on Monday.

There is a lack of funds to finance the proposal, they said, days after President Benigno Aquino III exercised his veto powers against a congressional measure on the pension hike for retired members of pension fund for private sector employees.

The increase in pension payments would have led to a net loss of P26 billion for 2016 – instead of the projected revenue of P41 billion.

By 2027, the pension fund would have incurred P130 billion in annual net loss, SSS President and CEO Emilio S. de Quiros Jr. told reporters in a briefing in Quezon City.

As a result, the SSS fund life would last only up to 2027 and not until 2042 as earlier projected, De Quiros said.

"Kailangan may mag-sustain ng pondo ng mga pensyonado," De Quiros emphasized.

Low contributions, low benefits

A member of the SSS Commission noted the stark reality of the pension fund and how the members contributions translate into benefits.

"Current pensioners, we agree with you na mababa ang pension. Alalahanin natin ang main reason bakit mababa ang pension is because we asked people to contribute significantly lower," Michael Victor Alimurung, SSS Commission member, said.

The average monthly pension is P3,200 per month.

"Pensioners under the SSS currently receive P15 for every P1 they have contributed," Alimurung noted.

SSS members would have to increase their contributions for the proposed bill to be feasible, he added.

"Madali ho magbigay pero may katapat 'yan na contribution increase. Kung may katapat 'yan na increase, walang problema," Alimurung said.

"Do we want to collect from people who do not have any ability to pay so that we can increase pensions for people who can pay?"

Additional funding

The pension increase requires an additional funding of P4.3 billion monthly or P56 billion per year including the 13th month pension, according to an SSS study.

"To provide for the system's cash needs, the SSS would need to liquidate P47 billion to P51 billion in financial assets, leading to a P19-billion drop in investment income for 2016," the pension fund said in a separate statement.

It emphasized that an increase in pension benefits has not been totally shelved.

"Palagi po naming pinag-aaralan ang pension increase, pati na ang iba pang programa at benepisyo," De Quiros noted, citing a 5-percent across-the-board increase in July 2014.

"Pinag-aaralan pa kung pwedeng magbigay ng dagdag-pensyon at kung magkano ang kakayanin," he said.

But the SSS official found it hard to come up with a timeframe for the study. "Hard to say," he said.

On Thursday, President Aquino vetoed House Bill 5842 which sought a P2,000 across-the-board increase in the SSS monthly pension.

"In his message, President Aquino said the stability of the entire SSS benefit system, whose present membership comprises about 31 million individuals, will be seriously compromised in favor of two million pensioners and their dependents," Communications Secretary Hermino Coloma, Jr. said in a statement.

The Department of Finance (DOF) on Friday noted the President made the right  decision.

"As a stand-alone measure, the vetoed bill would have granted a pension increase to two million current retirees but imperiled the financial future of 31 million of our prospective retirees," Finance Secretary Cesar Purisima said. – VS, GMA News