However, the increase — which takes effect on March 1 — will affect only the contribution of employers.
Employees in the private sector currently contribute 8.4 percent of their monthly salary to the SSS. Of this, only 3.33 percent is drawn from their monthly pay as the other 5.07 percent is the employer’s counterpart contribution to the fund.
Effective March 1, employers’ share will rise to 6.07 percent while employees’ contribution stays at 3.33 percent.
SSS president and chief executive officer Corazon de la Paz explained that the minimal one percent rate adjustment was approved by Malacañang last week to correct the imbalance between the fund’s growing benefit payments and the amount it receives in the form of monthly contributions from its members.
The SSS said that from January to October last year, the contributions amounted to P28.41 billion while payments for benefits reached P32.27 billion. Because of the collection shortfall, the SSS was forced for the first time to "dip into its reserves to pay beneficiaries’ claims."
Dela Paz disclosed that since 1993, the contribution rate has been consistently outpaced by the amount needed to pay various benefits to its members.
The SSS hopes to raise an extra P13 billion ($288.3 million) a year to increase benefits for retirees.
De la Paz added that the move was also expected to improve the actuarial life of the fund. "This effectively safeguards the future benefits of our members," she said.
Even with the rate increase, the Philippines still has the lowest social security contribution in the region, compared to Singapore’s 40 percent or Malaysia’s 30 percent.