The Social Security System (SSS), striving to guarantee future benefits of members, has started to implement reforms to gradually bring back its fund life to perpetuity, a senior official said.
"We are taking small steps towards our goal of having a perpetual fund or a fund life of at least 75 years," said SSS President and Chief Executive Officer Emilio de Quiros, Jr.
He said since the SSS started in 1957 until September 2010, benefit payments of P734 billion exceeded contribution collections of P732 billion and "were it not for cumulated investment income of about P350 billion, the fund would have long been depleted."
In the last actuarial valuation in 2007, the SSS fund life was estimated to last until 2039, a big drop from the valuation in 1980, which was then valued to last to perpetuity.
De Quiros said pension benefits increased 21 times from 1980 to 2007 but the contribution rate was pegged at 8.4 percent for 23 years and was only increased to 9.4 percent in 2003 and to 10.4 percent in 2007.
"We need to implement reforms, but we don’t want a drastic one-time increase in contribution," he said. "We prefer to do it gradually."
The Social Security Commission, the SSS governing board, has approved in principle a proposed increase in the contribution rate by 0.6 percent from 10.4 percent to 11 percent of the monthly salary and the maximum monthly salary credit, the ceiling that serves as basis for contribution payments, to P20,000 from P15,000.
The proposed increases would lengthen the fund life until 2046 and result to higher sickness, maternity, disability, retirement and death benefits and bigger short-term loan amounts for members.
The 0.6 percent increase will be divided equally by the employer and employee. The employer share in the contribution will increase to 7.37 percent and the employee to 3.63 percent.
Contributions are savings, an investment for the future, and should not be considered as expense, De Quiros said, adding that the proposed increase should not be lumped with rising cost of commodities.
"We are still in the process of consulting our stakeholders. We will submit the results to the Social Security Commission and the proposed increases will be presented to Malacañang for approval," De Quiros said.
(Disclamer) Bene Nota: The views and opinions expressed here by the author are personal to him, and do not reflect the views and opinions of the website owners and administrators. Any issue or complaint about the article must be addressed solely to the author, who is solely responsible for the article.