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SSS says contribution rate hike in 2023 to beef up benefit payments

The Social Security System (SSS) on Tuesday defended the increase in contributions of members and employers to the pension fund scheduled next year, saying it would help fund higher benefit disbursements.

In a statement, SSS president and CEO Michael Regino said the “four-stage” contribution rate hike readies the SSS fund for the future needs of its members.

“The four-tiered contribution increase will ensure the pension fund’s financial viability for the benefit of its members, pensioners, and their beneficiaries,” he said.

The increase in contribution rate is under the Republic Act No. 11199, or Social Security Act of 2018, which then-President Rodrigo Duterte signed to raise the contribution to 15% by 2025.

Under the RA 11199, a 1% contribution increase is imposed on SSS members every two years starting from 12% in 2019 until it reached 15% in 2025.

Beginning January 1, 2023, the new contribution rate will be at 14%, up one percentage point from the current 13%.

“We have already expanded the benefits to our members such as the unemployment benefit, and maternity benefit under the Expanded Maternity Leave Law (EMLL). Both these benefits however have no particular source of funding but since 2019, we have continuously given these benefits to our members,” Regino said.

From 2019 until October 2022, the SSS chief said it has already disbursed P3.78 billion in unemployment benefits to more than 287,000 members.

The annual maternity benefit disbursement also rose by 78% from P7.07 billion in 2018 to P12.54 billion in 2022.

Regino said the previous contribution increases boosted benefit disbursements for its members.

“From January 2019 to October 2022, we have released P822.86 billion benefits to our members, which is 38% higher than the P596.30 billion benefit disbursements from January 2015 to December 2018 prior to the amendment of the Social Security Law,” he said.

Furthermore, the SSS chief said the latest actuarial valuation revealed that the pension fund’s life would last until 2054.

“The reforms in the contribution rates are among the factors that helped boost our fund life brought by Republic Act No. 11199 or the Social Security Act of 2018,” Regino said.

This is an indicator that the pension fund has enough funds to support the short-term and immediate financial needs of our members and pensioners in the decades to come, he added.

Under the new rate, employers would shoulder the one percentage point increase for its members with employers. The employee’s share will remain at 4.5%, while the employer’s share will increase to 9.5% from the current 8.5%.

The Employers Confederation of the Philippines (ECOP), however, is seeking to postpone the upcoming hike in contributions as businesses are still recovering from the effects of the COVID-19 pandemic.

Meanwhile, individual paying members such self-employed, voluntary, non-working spouses, and OFW members will shoulder the whole 14% contribution rate since they have no employers. 

There will also be an adjustment to the minimum monthly salary credit (MSC) from P3,000 to P4,000, while the maximum MSC will increase from P25,000 to P30,000.

“The new SSS contribution rate is also a great opportunity to help our members beef up their retirement savings through its mandatory provident fund program or the Worker’s Investment and Savings Program (WISP). We want our members to have a comfortable retirement after their productive years. Every additional peso that a member contributes is more savings for their retirement,” Regino said. —Ted Cordero/KBK, GMA Integrated News