SSS clarifies P843.9-billion net loss due to change in accounting standards

State-run Social Security System (SSS) on Tuesday clarified that the P843.9-billion net loss it incurred last year was due mainly to the change in accounting standards during the period.

According to the social insurer, the net loss was due to a shift into the standards in line with the Philippine Financial Reporting Standards (PFRS) 4.

“This increase in net loss from the previous year is due to the recognition of the margin for Adverse Deviation (MfAD) in our policy reserves,” president and chief executive officer Michael Regino said in an emailed statement.

“MfAD serves as a buffer for conservatism, which we have considered in our financial statements beginning 2021,” he continued.

The agency is mandated to provide social justice and provide protection to members and their families against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden.

Regino in the statement also assured that the reported losses do not affect the current cash flow and funding situation, and it remains “financially viable” or providing benefits to its stakeholders.

Cash inflows stood at P262 billion in 2021, with cash outflows of P234 billion composed of benefit payments, and P28-billion operating expenses.

The agency also noted that policy reserves are forward-looking estimates of net liabilities in the future, covering benefit payments which will be released to members and their beneficiaries moving forward.

“These future liabilities need to be recognized now as these provide us an accurate view of our long-term financial standing, which serves as our guide, as well as for the government in ensuring that we will be able to continuously serve our current and future members and their beneficiaries,” Regino said. — Jon Viktor D. Cabuenas/RSJ, GMA News