SSS contributions could increase to 17% to cover pension hike

From its current rate of 11 percent, the rate for contributions of active Social Security System members could increase to up to 17 percent over the next six years to be able to cover the hike in pension for retired members.

President Rodrigo Duterte on Tuesday approved a P1,000 increase in pension, along with a corresponding increase in premiums for active members.

An increase of 1.5 percent in premiums of active members will be implemented by May, which will hike the contribution rate from 11 percent to 12.5 percent to be shared by employer and employee. The maximum monthly salary credit will also increase to P20,000 from the current P16,000.

According to SSS Chairman Amado Valdez, the contribution rate could be increased annually until it reaches the target of 17 percent from the current rate over six years. 

"But as I said, madadagdagan next year. But the point is, we will always look into our efficiency. Pagagandahin natin iyong investment income. Down the line, baka hindi mo na kailangan mag-increase na additionally," he said. 

"So it will just be the stop-gap measure to ensure the sustainability because we want the base line no less than 25 years sana that the pension will stay," he added, noting that the ideal fund life should be up to 75 years. 

No taxpayer money

He added that the SSS is also looking into internal reforms to improve their earnings.  Valdez also said that Duterte approved another P1,000 pension hike in 2022. But if its internal reforms will bear fruit, the increase can be introduced as early as 2019.

Even with the current P1,000 increase, presidential spokesman Ernesto Abella said the SSS fund life will continue until 2040 once the increase in the contribution rate is implemented. He said that the pension hike will be covered by current contributions and the SSS investment reserve fund, and not government funds.

"The President is not amenable to using taxpayers' money to fund pension increase since SSS is a private fund," he said. 

Duterte's economic managers had earlier opposed a proposal to increase the pension to P2,000, with the President saying he was looking for a win-win solution. 

During the campaign, Duterte had promised the increase. His predecessor Benigno Aquino III had vetoed a law mandating a P2,000 pension increase. —JST, GMA News