SSS plans 14% increase in member contributions

MANILA, Philippines - State-run Social Security System (SSS) is planning to increase this year the contribution rate of members to 14 percent of the monthly salary credit following the implementation of the tax reform law.

In an interview, SSS president and chief executive officer Emmanuel Dooc said the state fund intends to pursue the hike in contribution rates following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which raises the take-home pay of Filipinos through cuts from their personal income taxes.

“We feel now that the TRAIN will provide relief in the form of lower taxes to our members so they can now afford to pay the extra additional contributions,” Dooc said.

He said the state fund is proposing for a three percentage point increase this year, which means the monthly contributions of its members will rise to 14 percent of their monthly salary credit from the current 11 percent.

Dooc said the increase would need to start at three percent as the pension fund was not able to implement last year the first tranche of the contribution hike under the original proposal.

In the original plan of the SSS, the premium hike should have been implemented starting with a 1.5 percentage increase in May last year, following President Duterte’s approval to raise the monthly benefits of SSS pensioners by P1,000 in January last year.

This should have continued in tranches of 1.5 percent each year until the total premium rate reaches 17 percent by 2020.

“But we lost that opportunity when the increase was not implemented last year, and we’re supposed to increase by another 1.5 percent (this year). So for practical purposes, to meet our projections, we have to increase it by three percent...It’s nothing new, it’s the same percentage,” Dooc said.

In addition, SSS is also pushing for an increase in the minimum salary credit of its members to P4,000 from P1,000 and the maximum salary credit to P20,000 from P16,000.

Dooc said there is a need to increase the premium payments of its active members to help the SSS in protecting the viability of the fund amid rising expenditures due to the P1,000 hike in pension benefits.

“(This increase) will improve the finances of the system and enable us to meet the financial obligations, including the pension benefit hike,” he said.

Based on the SSS’ actuarial studies last year, the pension hike cut the actuarial life of the fund by 10 years to 2032. If the SSS implements the premium increase, Dooc said the fund life would be extended to 2045.

According to Dooc, the SSS has a two-pronged approach to pursue the contribution increase.

One is through the passage of a bill amending its charter, which is now pending in Congress. He said the amendments will empower the SSS through the Social Security Commission to adjust the contribution rate.

The other is through the issuance of an executive order from the President granting the increase.

“Whichever comes first will enable us to increase the contribution,” Dooc said.

He said the SSS has submitted a proposal letter to Malacañang in June last year, and is planning to follow up the proposal this week through the secretary of Finance.