THE BILL allowing the Social Security Commission (SSC) to raise pension contributions starting next year hurdled the bicameral conference committee on Tuesday, with Congress fully adopting the Senate’s version.
Both chambers approved the substitute bill yesterday, which is scheduled to be ratified today before it is endorsed to President Rodrigo R. Duterte for enactment.
Social Security System (SSS) President and Chief Executive Officer Emmanuel F. Dooc said that although the measure’s current form relaxes spending pressures, he noted some opportunity costs that would have helped reduce the deficit in their pension payouts after the bicam left out some key provisions.
This includes the measure that would have allowed the SSS to set up mandatory insurance policies for its members.
“Ang hindi na-adopt sa akin na (The provision not adopted that for me is) critical and important is the authority to do insurance business. Hindi naisama (It was not included) because we would like to also take advantage of our wide membership. We have a captive insurance just like GSIS (Government Service Insurance System) which grows very significant income or revenues from its insurance business,” he said.
Mr. Dooc said they would defer proposing the measure indefinitely.
The committee also agreed to lower the delinquency penalty rate equivalent to two percent per month from the date the contribution falls due until paid, from three percent currently.
“We have been so used to imposing 3% so malaking bawas din sa income namin (so this will reduce our income significantly),” said Mr. Dooc.
According to the SSS official, they expect an additional P16 billion in revenues in the first year of the proposal’s implementation.
“It’s not huge kasi (because) before we envisioned collecting three percent additional contribution in one lump sum. That would have given us over P50 billion a month, but I’m happy that we have this law and long-term there are provisions to collect more,” he said.
The committee likewise agreed to reduce the mandatory actuarial assessment of the fund to every three years, from four years.
The bill allowed SSC to increase the contribution rate by one percentage point every other year starting 2019 at 12%, until 15% by 2025, from the current 11%. It also gradually raises the minimum and maximum monthly salary credits — the basis for the contribution payments — every other year starting 2019 at P2,000 and P20,000, respectively, until P5,000 and P35,000 by 2025, from P1,000 and P16,000 currently.
Starting 2019, 8% of the 12% will be shouldered by the employer, and 4% by the employee, from the current 7.37%-3.63% split. By 2025, the sharing scheme will be 10% for the employer and 5% for the employee.
Mr. Dooc said the SSS will pay out about P185-190 billion in benefits this year, but only generate P177 billion in contribution collections, resulting in a deficit of about P8 billion to P13 billion. Although the above-mentioned P16 billion will cover the deficit, Mr. Dooc said the expanded maternity leave bill ratified by Congress last month will cost the SSS about P4-5 billion more.
“Still a deficit, but the deficit will be much lower if we do not collect any contributions. So we will still tap the investment income. There are also other measures and initiatives that we have done or undertaken in order to further boost our finances,” he added.
Mr. Dooc also noted that the second P1,000 pension hike — the second trance of the P1,000 benefit increase in 2017 — may give the SSS another headache if Mr. Duterte fulfills his promise to implement it in 2019.
“If we pay the second P1,000…that will be more or less P36 billion, and we will be collecting only P16 billion for the one percent[age point] additional contribution,” he said.
Moreover, the bill also introduces an Unemployment Insurance or Involuntary Separation Benefits, which will be available to SSS members not over 60 years old who are involuntarily separated from employment. These members shall be paid benefits in monthly cash payments equivalent to 50% of the monthly salary credit for two months at most.
It will also include the compulsory coverage of overseas Filipino workers to social security protection.
The measure also requires the SSS to invest at least 15% of its reserve funds in domestic investment vehicles, and foreign currency deposits.
The bill will also give the SSC authority to condone, enter into a compromise or release, in whole or in part, penalties imposed to delinquent social security contributions; while the SSS will also have the power to adopt or approve the annual and supplemental budget including salaries and allowances of the SSS personnel, and to authorize such capital and operating expenditures and disbursements of the SSS as may be necessary and proper for the effective management and operation of the SSS.
The SSS’ new charter, which was identified as a priority bill, was approved in the House of Representatives was approved on third and final reading in January last year, while the Senate approved it on Monday.
Mr. Dooc said he expects the bill to be signed by the President before the end of the year.
“This will ensure a robust strong and more stable SSS. I think it is important the SSS should have a financial robust fiscal condition so that we can fulfill the mandate given to us to provide meaningful and universal social security protection to our workers,” said Mr. Dooc.
But Mr. Dooc said he is confident that the contribution “can improve the fund life,” which currently lasts until 2032. — Elijah Joseph C. Tubayan