That recommendation is part of the national government’s package of policy reforms to address the country’s fiscal problems, which could result in what many call a "fiscal crisis."
"We are pursuing action plans to help avert any threat to the fiscal sector and the economy as a whole. We aim a balanced budget of the national government by 2009, and this will be achieved through a combination of tax measures, rationalization of expenditures, and reduction of the deficits of the government-owned and-controlled corporations (GOCCs)," NEDA director general and Socio-Economic Planning Secretary Romulo L. Neri Neri reiterated the need to allow the SSS to increase members‚ contribution to narrow the funding gap and privatize and diversify funds management to allow for better returns on the funds invested.
Last year, it had already increased the contributions of its 24 million members from 8.4 percent to 9.4 percent by 2005.
Another one-to two-percent rate hike from the existing 9.4 percent of the member’s monthly earnings is being mulled by the government pension fund although it still remains a proposal.
The total target increase required to keep the government pension fund viable beyond 2015 is 14 percent by 2005 to 20 percent after 2011.
The last time the pension fund (SSS) implemented an increase was in 1980. And that was approved from the original proposal presented in 1972.
Actuarial studies in the past 40 years show that without a rate hike, reserves needed to pay benefits to its increasing number of members would dry up by 2015. By then, government would be forced to step in and include SSS in its national appropriations similar to Napocor.
The International Monetary Fund and the Asian Development Bank earlier expressed concern about the dire conditions of SSS’s reserves. Both made it clear that the national government could not afford further bleeding of its funds which could result in another record level in its fiscal deficit.
Meanwhile, Neri also said that the national government would completely detach funding of local government units (LGUs), and hinted on plans to slash the bureaucracy.
"Functions devolved to local government units will no longer be funded by the national government. Strict guidelines on pork barrel utilization will also be laid out so that pork barrel, which is difficult to eliminate, can be used productively," he added.
The chief economic planner added that economic managers will likewise push for the passage of the Fiscal Responsibility Bill, which will ensure that no new expenditure will be approved without new taxes to fund it. – TPT