President Rodrigo Duterte has approved a P1,000 hike in the Social Security System (SSS) pension effective this January, Malacañang announced Tuesday, January 10.
However, along with this is a 1.5-percent increase in the contribution rate, Presidential Spokesman Ernesto Abella announced.
In a press briefing in Malacañang, Abella said the president seeks to “fulfill a social contract with the Filipino people… while exercising fiscal responsibility to ensure the economic sustainability and protect the gains of those who have prudently invested in the nation’s future.”
“The funds covering the increase will be through current contributions and investment reserve fund, pointing out that the president is not amenable to using taxpayers’ money for the SSS being a private pension fund,” he said.
Abella stated that SSS total assets amount to P487 billion as of October 2016 and its fund life is until 2042. Even with the P1,000 peso increase, the fund life will continue until 2040 by May 2017, when the contribution rate and increase in monthly salary credit to P20,000 from P16,000 is implemented.
Thus, starting May 2017, a 1.5-percent contribution rate increase will be implemented, increasing the contribution rate to 12.5 percent from the current 11 percent.
“In peso value, the additional total contribution will range from P15 to P740 equally shared by employer and employee,” Abella explained.
“The proper perspective is to view SSS as a long-term savings and not as an expense and actively paying SSS members after all enjoys benefits, specifically six benefits and loan privileges,” he added.
To ensure sustainability, Abella said SSS is setting in place legal action plans to reduce contribution delinquency, as well as executive interventions needed to improve collection through issuance of an executive order.
Furthermore, SSS Chairman Amado Valdez said that while the SSS pension increase takes effect this month, there might be a slight delay to around February “due to some systems requirement.”
“Kailangan ng recomputation so there might be a slight delay,” he said.
At the same time, Valdez said another P1,000 pension hike will be implemented in 2022 or even earlier, possibly 2019.
“We projected the next P1,000 in 2022 but if we are able to implement and get favorable results maybe it won’t take until 2022, maybe by 2019 we’d be able to comply with the next P1,000,” he said.
With the approval of the SSS pension hike, Valdez thanked President Duterte “for his sense of caring for our pensioners.”
“As father of people he is the father of everybody,” he said.
Valdez also thanked the economic managers “for the prudence in reminding us that we have to ensure sustainability of the fund.”
In doing so, he said, the life span of the fund will even pass the threshold of 2022 and perhaps beyond.
“And also we would like to thank Congress because they have expressed clearly… public sentiment about the need to take care of our elderly,” said Valdez.
Meanwhile, Valdez also said the agency will now crack the whip against erring employers.
“You will find in the following days cases to be filed against erring employers. There will be some contempt charges against employers who do not respond to the summons of the court. Because the fund is a social protection, so that we are ensured that the future generation of retirees are well protected,” he told reporters.
Source: Manila Bulletin