THE HIKE in the Social Security System’s (SSS) contribution rate is meant to guard the fund’s long-term viability and to offset the increase in monthly pension implemented in 2017, the state-run pension fund said.
SSS announced it will push through with the scheduled hike in the monthly contribution rate to 13% of members’ respective salary starting January from 12% currently.
“We understand the plight of our pensioners and recognize the good intention of the P1,000 second tranche additional monthly benefit, but without any additional funding, this would significantly reduce the SSS fund life,” SSS President and Chief Executive Officer Aurora C. Ignacio said in an online briefing.
“Historically, from 1980 to 2016, the contribution rate was only increased four times while pensions increased 22 times,” she added.
Ms. Ignacio said the additional one percent will be equally shared by the employer and the employee, with each of them spending an additional 0.5% for the monthly contribution.
The higher contribution rate is part of reforms under Republic Act No. 11199 or the Social Security Act of 2018.
Meanwhile, SSS contribution collections in the 10 months ended October went down 5.4% to P169.73 billion from P179.34 billion a year ago.
“Any drop in collections may lead to cash flow and liquidity issues. This could endanger the SSS’ ability to provide its members and their beneficiaries with benefits and loan privileges,” Finance Secretary Carlos G. Dominguez III said in a statement.
Despite the drop in collections, the pension fund’s investments remain well-managed, with the agency able to respond to members’ needs, he said.
SSS said it is also launching its Workers’ Investment and Savings Program for members with salaries in excess of P20,000 up to those with the maximum monthly salary credit of P25,000. Members that fall under the bracket will automatically have a portion of their contributions going into the new investment scheme.
“For example, under the P25,000 monthly salary credit, a member who will be paying the new monthly contribution of 13% rate will actually shell out P3,250, of which P2,600 will go to the Regular Social Security Fund (RSSF) and the remaining P650 to the Workers’ Investment and Savings Program,” SSS said. — L.W.T. Noble