Economic managers want higher contribution for SSS pension hike

MANILA, Philippines — Economic managers have sounded the alarm on the looming approval of a pension hike for Social Security System (SSS) retirees and are now proposing a higher member contribution than what their predecessors envisioned.

 

In a memorandum to President Rodrigo Duterte last November 15, Finance Secretary Carlos Dominguez, Socioeconomic Planning Secretary Ernesto Pernia and Budget Secretary Benjamin Diokno opposed congressional resolutions that aimed to grant one of the president's campaign promises.

 

"We recognize the thrust of the joint resolution to promote the well-being of the country’s private sector retirees," they said, as quoted in a statement on Sunday.

 

"(However), any increase in pension without increasing member contribution and expanding its membership base would introduce severe fiscal issues, and should be discouraged,” they added.

 

The House of Representatives and the Senate passed two joint resolutions, which aimed to grant the pension hike on a staggered basis at P1,000 on January 2017 and January 2019.

 

The resolutions will now go to Duterte for approval before it could take effect. 

 

While still amenable to the increase, the economic team said this should come with a higher member contribution rate of 17 percent, up from the current 11 and higher than the 15 percent suggested by the previous government.

 

The contentious pension hike traces its roots to the veto of former President Benigno Aquino III of a bill that would have granted such. Duterte, during his campaign, promised to pursue the measure. 

 

"We believe matching additional benefits with [an] increase in contribution is the best action [the] government can take from a fiscally sound and equitable standpoint," the economic managers said.

 

"Government subsidy, while ready to make our social system viable when it fails, is primarily a fund of last resort. [It should] not to be used as an excuse for projects or regulations that are financially unsustainable and unviable to begin with," they said.

 

According to SSS figures, the P2,000-pension hike will cut the fund's life to between 2025 and 2028 from the current 2042. That would mean current members may not be able to enjoy any retirement benefit.

 

It would also cost P64 billion in additional pension budget every year. Currently, the SSS has 33 million active members and 2.2 million retirees.

 

In a statement last Thursday, SSS Chair Amado Valdez, who earlier said a contribution increase is not on the table, also toned down support for the measure.

 

"SSS is also guided by the Department of Finance in ensuring that the implementation of the proposed pension increase will not drive the fund to the brink of bankruptcy," Valdez said.

 

"We are wary of possible criticisms for our support for the pension increase and we don't want to be seen as irresponsible," he added.

 

He earlier suggested numerous reforms to the SSS Charter, including giving the pension fund the mandate to acquire at least 25 percent of new toll roads and to be given the first say to public-private partnership projects for additional income.

 

That will, however, take time as it would mean discussions on amendments to the charter, which would take the course of a full law.