By Melissa Luz T. Lopez, Senior Reporter
THE Social Security System (SSS) may opt to remove the cap on monthly contributions instead of implementing an across-the-board increase in the amounts collected from private sector workers, the Finance chief said.
Finance Secretary Carlos G. Dominguez III said SSS officials can also look at removing the cap on employee contributions in computing monthly payments in order to generate more funds and extend the life of the pension firm.
“[T]heir board has to decide on what to do but there are various ways of doing it. They have to manage their funds better, get a better yield on their funds, or they can increase contributions or they can just say remove the cap on the salary,” Mr. Dominguez told reporters late Thursday.
Currently, the SSS collects 11% of the monthly salary of Filipinos in the private sector as automatic contributions to the pension fund. The maximum monthly contribution of employees stand at P1,760, or 11% of the salary cap set at P16,000.
“It’s only P16,000 – anything over P16,000 doesn’t get any increase, so they can do that. By doing that they may not even require an increase in contribution, but again I leave it up to their board to make a recommendation on what to do and we will comment on it when we see the various alternatives they have submitted,” the Finance chief added.
SSS initially planned to raise monthly contributions by 1.5% to reach 12.5% of the monthly salary credit of workers starting May, as the compromise to President Rodrigo R. Duterte’s decision to hike pension payments to retirees by P2,000.
A P1,000 raise started in January, to be followed by a second wave in 2019.
The contribution hike – amounting to 1.5% to 12.5% of the monthly salary credit as planned – was initially slated to be implemented in May as it was made a condition to the first tranche of the P2,000 pension hike approved by the President in January.
Mr. Dominguez said the Department of Finance is still discussing with the SSS its next moves, adding that the state-run firm can also look into increasing the monthly contributions and investing in better-yielding investments.
Social Security Commission Chairman Amado D. Valdez said on Thursday that the contribution increase is the agency’s “last option” in terms of prolonging the life of the pension fund. Instead, they are currently evaluating various income-generating schemes and asset disposal to raise fresh amounts.
Economic managers earlier recommended a 17% rate in order for the SSS to keep its fiscal position and the fund’s actuarial life stable.