SSS to hike contribution of members to at least 16%

The Social Security System (SSS) plans to increase members’ contribution rate between 16 percent to 22 percent in the next six years.

SSS President and Chief Executive officer Corazon dela Paz said the rate hike should be "done in a programmed, realistic and transparent manner in the next six years."

De la Paz said the realistic rate could be a one-to two-percent increase annually or a graduated scale equivalent to 16 percent for the next six years.

"There is no problem with the SSS in the near term. It is the medium- to long term that concerns us. And take note that we are not alone in this situation as the other pension funds globally are experiencing the same fate," De la Paz added.

In 2003, the SSS implemented a one percent rate hike, which was shouldered solely by employers.

Based on earlier studies, the pension fund’s reserve would dry up by 2015. Recent studies also showed that the pension fund’s problem is partly due to the low rate of contribution versus the high level of benefits extended by the SSS.

Since 1957, the SSS has collected a total of P351 billion in contributions versus P357 billion in total benefits granted to its members.

"Clearly the problem is the level of contributions," SSS officials said.

The SSS has already suspended the grant of new benefits to its members.

The Department of Finance, the National Economic and Development Authority, the Asian Development Bank (ADB) and the International Monetary Fund (IMF) have been urging the state-owned pension fund to increase member contributions to avoid a financial crisis.