Bicam OKs bill overhauling SSS charter

The bicameral conference committee approved Tuesday the bill overhauling the charter of the Social Security System.

Senator Richard Gordon, sponsor of the Senate version of the bill, described the measure as a game changer and expected to extend the fund life of SSS by at least six years.

Minority Leader Franklin Drilon said the joint panel basically adopted the version of the Senate.

He said the panels of the Senate and House have improved the charter of the Social Security System.

He said the first important change is professionalizing the membership of the SSS board by requiring them to be a lawyer or involved in management or banking or insurance "so that their qualifications will be fit to the requirements of the SSS."

"Remember that the SSS is a fund and you manage the fund for the future of our retirees or employees, so it is very important that the commission should be composed of professional members," he told reporters after the bicam meeting at the Senate.

Drilon added the ex-officio chairman of the SSS commission is the Secretary of Finance.

"Again, this is a payroll tax and therefore, the Secretary of Finance should be the ex-officio chair. Again, it will put professionalism in the commission," he said.

Drilon said to remove the commission from political influence, the commission members will have a term and they will have the right to approve increases in benefits.

He said the premium payments are fixed in the law because SSS handles payroll tax and it should not be left to their discretion.

Gordon said that under the bill, there will be a compulsory coverage of both land-based and sea-based OFWs to the SSS, "provided that they are not over 60 years of age." 

He added that the Department of Foreign Affairs and the Department of Labor and Employment would be the primary agencies that "would negotiate for the OFWs, especially those working in Middle East countries while "enhancing the functions of the Philippine embassies therein to enable them to collect the SSS contributions."

Gordon said that although at present there are only 500,000 OFW workers who are covered by the SSS, the bill may help expand that number to two-and-a-half million members.

"Even the Filipinos who became naturalized Americans and retired in the United States may be invited to invest in the provident fund," he said.

He said that the bill would also give the SSS Commission the power to determine the salary credit and monthly contributions of members, which would now allow the commission to increase contributions "depending on the actuarial survey."

"The bill envisions a benefits-based system—what you invest is what you get; no investment, no benefit—through which the SSS contributions could be raised without seeking the approval of the President or the endorsement of Congress because the discretion to increase contributions could be left to the better judgment of the SSS board of directors provided it would generate more suitable pensions," Gordon said.

He said the expanded powers are needed since it would allow the SSS management to increase the salary credit and contribution of employees "considering that at present it is only limited to P16,000 which yields very little benefit."

Under the new reforms, Gordon said, the SSS would also be empowered to invest its Reserve Funds to "grow the wealth of SSS and ultimately yield higher income."

However, he said these investments must satisfy requirements of liquidity, safety/security and yield "to ensure the actuarial solvency of the funds of the SSS."

"The bill does not promise an abundance of wealth but to secure people in case they would encounter unwanted situations in their lives through a lifeline that they themselves created through their contribution," he said.

At present, there are 36 million registered SSS members but only 15 million are actively paying.

Separation benefits

The bicam-approved bill also contains an unemployment insurance provision which will give jobless SSS members “involuntary separation benefits” for two months “with the amount for each month equivalent to half of the average monthly salary credit.”

Senate President Pro-Tempore Ralph Recto said the unemployment insurance is not a loan but forms part of the benefits an SSS member can avail of, like maternity and sickness benefits.

Under the bill, the “unemployment insurance or involuntary separation benefits” can be received by a member who is not over 60 years old and who has paid 36 months of contributions.

Twelve months of these contributions should be made within the 18-month period immediately before the involuntary loss of a job.

But Recto explained that it can only be claimed once every three years. The Senate-approved bill also provides that if it will coincide with “two or more compensable contingencies, only the highest benefit shall be paid.”

The other important amendments to the SSS charter are:

• The scheme in which contributions on top of the regular social security pension fund shall accrue to a provident fund;
• The option to voluntarily contribute to a provident fund, which shall be tax-free;
• Allowing kasambahays whose actual monthly income is lower than the minimum salary credit to contribute based on their actual monthly salary;
• Authorizing compromises or releases in whole or in part, any interest, penalty or any civil liability to SSS in connection with the investments authorized under the SSS Charter;
• Permitting the condonation of penalties;
• Liberalizing the investment portfolio by allowing it to invest in government-led infrastructure projects; and
• Amending the investment portfolio by removing certain or all of the caps or limits on a menu of permissible investments.

—RSJ/KG, GMA News