MANILA, Philippines — Social Security System is standing firm in its decision to proceed with the contribution rate hike by 2023, as it maintains that deferring the contribution rate increase would reduce the actuarial life of the SSS.
SSS president and CEO Michael Regino reiterated that the contribution increase would take effect as scheduled at the onset of the new year.
In accordance with the schedule provided under the Social Security Act of 2018, the contribution rate will increase to 14 percent from the current 13 percent.
Under the law, SSS should gradually increase the contribution rate by one percentage point every two years until it reaches 15 percent by 2025.
But just before the year ends, the Employers Confederation of the Philippines appealed for the postponement of the measure.
“We are duty-bound to implement the provisions stipulated under the law, which aims to ensure the pension fund’s financial viability for the benefit of its members, pensioners and their beneficiaries,” Regino said.
Under the new contribution rate, employers will shoulder the one percent increase, which means that their contribution would increase to 9.5 percent. The remaining 4.5 percent will be deducted from the employee.
Individual paying members, such as self-employed, non-working spouses and overseas workers, will have to shoulder the entire 14 percent since they have no corresponding employer.
Regino explained that gradually increasing the contribution rate is among the reforms being implemented by the SSS to lengthen the fund life and to ensure that the system can provide the benefits for members and pensioners.
“The new contribution rate would help us continue providing benefits to our members. Increasing the SSS contribution has helped us give higher sickness, disability and death benefit disbursements to our members and their beneficiaries who are affected by the pandemic,” Regino said.
“It also played a vital role in extending our fund life. Before the Social Security Act of 2018, we expected that our fund life would only last until 2032. But with the reforms brought by the new law, the fund life is now extended until 2054,” he said.
Regino argued that postponing the contribution increase could reduce the fund life of SSS as the 2054 projection is based on the hike being given out at the right time.
This means that an additional 22 years have been added to the SSS fund life with the help of contribution rate increases since 2019.
He maintained that employers should consider the rate increase as an investment in their employees.
Further, Regino noted the only way to defer such measure is through an act of Congress, which he would not recommend to President Marcos.
He said the rate increase would help make SSS be at par with the Government Service Insurance System where state workers are contributing 21 percent.
“Every additional peso that is put to SSS would translate to higher benefits for our members in the future,” Regino said.