Second tranche of SSS pension hike on hold

MANILA, Philippines — The second tranche of another P1,000 hike in pension benefit cannot not be released unless the sustainability of the social security fund is ensured, SSS president and CEO Emmanuel Dooc said yesterday.

The SSS official said the fund’s position that the second tranche of the additional benefit for its retired members cannot be carried out without an increase in members’ contribution to between 12.5 percent to 14 percent from the current 11 percent.

Dooc said SSS is also looking forward to the passage of the proposed amendments to the SSS charter that will expand the power of the Social Security Commission, enabling it to raise the contributions, improve its benefits system, and condone penalties of delinquent employers without prior approval of the president with the goal of having more employers settle arrears.

“That is our guiding principle and that will be the policy  because I do not want to bankrupt the system. I did not join SSS to preside over its demise,” he said during the Kapihan sa Manila Bay news forum yesterday.

Dooc said the fund should ideally have an actuarial life of 60 years to service the claims of all its members amid various economic challenges such as inflation and increasing longevity.

“The ideal is about at least 60 years, that is considered perpetual already. And we are far from that,” he said.

The country’s social security fund now only has an actuarial life of only 14 years. With the implementation of the first tranche of additional P1,000 in pension last year, the actuarial life of the fund was shortened to 14 years to 2032 from 2042. If the second tranche of pension hike is implemented next year, the SSS will run out of money in seven years.

“Under the present conditions, it would be difficult to implement the second tranche. It will be unfair to the actively contributing members if we drain the funds of SSS and if they retire, they will no longer get the benefits they are paying for now,” said Dooc, noting the fund currently has some 15 million actively paying members.

Dooc said, however, that the fund will try is best to keep President Duterte’s campaign promise of improving the life of retirees within term.

“If we go by what the President said during the campaign and even during the early days of his administration that he wants to improve the life of the pensioners, the word used was during his term. So we will do our best to keep his word,” said Dooc.

Amending the country’s 21-year-old social security law will solve most of the problems in the state fund particularly its sustainability as it would also enable the fund to diversify its investments to more aggressive instruments to boost earnings.

As a state fund, SSS is a major capital market player but most of its investments are in government securities with P200 billion invested.

It can also bring more delinquent contributors back into the fold by condoning penalties and setting them back on track to remitting contributions.

“The power to condone penalties of delinquent employers. That is critical to us because right now our employment delinquency is P14 billion,” he said.