SSS warns employers to pay correct contributions or face business closure

Employers must pay the right amount of employees’ contributions to the pension fund or face businesses cancellation, Social Security System (SSS) Chairman Amado Valdez on Tuesday warned.

“I am warning employers who are not paying enough – we will cancel their franchise so they can no longer do their business,” Valdez said in a television interview.
 
Valdez noted the bulk of the pension fund's revenue comes from investment in equities and government securities, not from members' contributions.
 
“This is what we’ve been reviewing,” he noted.
 
Labor Secretary Silvestre Bello III is a member of the Social Security Commission, so the “thrust of SSS will be in line with what other government agencies are doing,” Valdez emphasized.
 
The pressing issue now nagging the pension fund is how to finance the increase in monthly pension of retired members.
 
“The philosophy behind this is if you put more support on the retirees, you will be adding to economy. Giving them to retirees will have a multiplier effect,” he said.
 
However, the “overwhelming challenge” in raising pensions is the additional P58 billion a year the SSS needs to finance the additional payout.
 
“If we raise it, then we need 17 percent of the salary. You would need a 6 percent increase in contribution to be able to maintain the present life span of SSS. That is why it is a drastic backtrack if we increase it by P2,000,” he said.
 
“The contribution is not enough, so the fund will end in 2025,” Valdez added.
 
The SSS is studying a calibrated approach to make the pension increase happen.
 
“But we have not agreed on how much would be added to the pension right now and we have about some six options in order to cushion the impact of pension increase,” he said.

He said an example is to implement a gradual, yearly increase of P500 a month for four years.
 
“The rule of thumb is we have at least a breathing space of about 15 years. If we have 15 years of catching up, we will be able to push forward again the life span, this is the number we want to capture,” Valdez said.
 
He hopes to realize an increase in monthly pension next year, “but as to how much and the modality are still under deliberation.”
 
“We would like the House and the Senate to hear us first. The problem that we would like to avoid is if they will say give this additional P2,000, but without providing financial support,” he said. — Ted Cordero/VDS, GMA News