SSS: Higher contributions mean better benefits

(Updated 6:13 p.m., Jan. 3, 2014) Higher contributions translate to better benefits, in other words pay more to get more, officials of Social Security System said, explaining the need to increase how much members must contribute to the pension fund.

 

It is also part of a larger scheme to prolong the life of the pension fund beyond 2044.

 

SSS members may be paying higher contributions starting this year, but  the state-run pension fund for private sector employees emphasized that better benefits will accrue to them immediately – as in starting this January.

 

Benefits come in the form of salary loans, sickness and maternity benefits and pensions, May Ciriaco, SSS vice president for Management Services and Planning said in an interview on GMA News TV’s “News to Go” on Thursday.

 

“Kasi nga with the higher contributions now, iba na 'yung basis – siyempre – ng benefit payments. That will already reflect to better benefits, so the computation ay 'yung higher rate na,” she said.

Private sector consulted

• increase its membership base

• liquefy receivables by collecting on delinquent accounts

• clean up all non performing assets

• audit its system to prevent spurious loans

• continuously seek high-yielding safe investments for idle funds

• cut administrative cost by reviewing plantilla and possible clustering of branches

• strengthen its balance sheet – statement of financial condition – accounts.

 

Ciriaco advised members who despair over the prospect of higher salary deductions: take the news as a form of blessing. 

 

“Look at the brighter side... Look at the higher benefits also... It's actually good news kasi for the worker, the higher rate reflects to higher benefits in the future,” she said. 

 

For 30.04 million individual members and 871,642 employers enrolled under the system, contributions will rise to 11 percent from 10.4 percent effective January 2014, according to the the pension fund.

Extending beyond 2014

 

In the same interview, Ciriaco said the increase in contributions is partly to meet the need to extend the life of the existing pension fund that members can enjoyed. Without an increase, the fund will dry up by 2044, she added.

 

“Every four years, nag-su-submit  kami ng actuarial valuation sa Presidente at Kongreso, na tinatakda kung hanggang kelan tatagal ang pondo ng SSS. Ang tinatayang pondo as of our last valuation nung 2011, tatagal ito hanggang 2044,” she said. 

 

Long term, Ciriaco noted the increase starting this January will benefit future retirees.

 

“Ang mangyayari dito... kailangan pag-igihin 'yung pondo para lalong tumagal pa, para 'yung mga susunod na henerasyon na nagsimulang magbayad ngayon ay meron silang makikitang pensyon sa hinaharap... para tumagal 'yung pondo hangang 'yung pinaka huling beneficiary natin ay may makuha,” she said.

 

In an earlier interview with reporters, SSS president and CEO Emilio de Quiros said the increase is meant to compensate for liabilities of the fund. 

 

"The increase in contribution rate is to correct unfunded liability, and this will reduce the unfunded liability by P166 billion or 15 percent," De Quiros last October.

 

Unfunded liabilities mainly constitute difference between future obligations and the value of funds now available to cover the future payments.

 

As of December 2011, the unfunded liability of SSS was pegged at P1.07 trillion and was expected to  increases by about 8 percent a year.

 

Under the new contribution schedule, P16,000 is the maximum monthly salary credit (MSC) which forms the basis for computing SSS benefits.

 

"The new maximum MSC at P16,000 means that a greater portion of the members' incomes are covered in their SSS contributions... Higher contributions eventually mean higher benefits in the future," De Quiros said.

 

Approved by PNoy

 

President Benigno Aquino III favors the increase and earlier cited the same reasons as Ciriaco noted. In his fourth State of the Nation Address last July, Aquino proposed a scheme to prolong SSS pension fund.

 

“We believe that it is time to amend the SSS Pension Scheme. We must establish measures that remedy the outflow of funds. If we add 0.6 percent to the contribution rate, it will immediately deduct 141 billion pesos from the unfunded liability of the SSS. If we begin to invest in our future today, no further problems will be handed down to the next generation of Filipinos," Aquino said.

 

On September 20, the SSS governing board approved a resolution implementing the increase in contributions. 

 

The following month, De Quiros disclosed the details of the adjustments that would eventually raise the contribution rate to 14 percent of the MSC from 11 percent.

"Kasama sa reform agenda 'yung increases, hindi ito 'yung last... Pero it undergoes a very long process of consultation with labor groups, [board] approval and Malacañang approval," May Rose Francisco, Social Security officer IV, told GMA News Online on Thursday.

 

The state-run pension fund has been pushing for a higher contribution rate since 2011. 

 

"For every P1 contribution, P6 is generated in terms of benefits. It will come to a point SSS will not be able to provide benefits due to the gap between P1 and P6," De Quiros said.

 

SSS bonuses 

 

Ciriaco also reiterated that the controversial bonuses received by the SSS board members come from a separate fund. 

 

“'Yung bonus na sinasabi, may batas 'yan. 'Yung bonuses naman na total na binigay sa board ay 10 million lang. So kung baga, kasama na 'yun sa operating expenses at na compute na 'yun para sa pondo sa hinaharap,” she said.

 

Ciriaco was referring to the report that named at least eight SSS executives as having received bonuses averaging a little over P1 million in 2012.

 

“Let's put it this way: [yung bonuses] kasama na siya sa operating expense para patakbuhin 'yung organization, at hindi dun sa total earnings ng kumpanya. Pag mag-increase ka kasi ng rate, para 'yun sa long term na pondo. Dapat hiwalay nating tinitingnan 'yun,” she added. – VS, GMA News