MANILA, Philippines – President Benigno Aquino III on Thursday vetoed the enrolled bill which increases the Social Security System (SSS) monthly pension of retirees by P 2,000.
Aquino vetoed House Bill 5842 or “An act mandating a two thousand Peso (P 2,000) across-the-board increase in the monthly pension with corresponding adjustment of the minimum monthly pension under the Social Security System, amending for the purpose Section 12 of Republic Act No. 1661 as amended otherwise known as ‘SSS act of 1997’” without his signature citing financial consequences.
“While we recognize the objective of the bill to promote the well being of the country’s private sector’s retirees, we cannot support the bill in its present form because of its dire financial consequences,” Aquino’s veto message address to the Congress read.
Aquino said the pension hike for over 2 million pensioners may result to substantial negative income for the SSS as it may only resort to using its Investment Reserve Fund (IRF) to support the pension hike.
The president said the IRF may diminish over the years and reached zero by 2029.
“More specifically, the proposed pension increase of P2,000 per retiree multiplied by the present number of more than 2 million pensioners will result in a total pay-out of 56 billion annually. Compared against annual investment income of P30 billion to P40 billion such total payment for pensioners will yield deficit of 16 to 26 billion annually,” Aquino explained.
“The stability of the entire benefit system whose present membership comprises about 31 million individuals will be seriously compromised in favor of 2 million pensioners and their dependents,” he added.
Due to the financial considerations, Aquino was constrained to veto the enrolled bill.
The House of Representatives passed the SSS pension increase bill on June 9, 2015 and the Senate adopted it without amendments five months later on November 9. The current minimum SSS pension is P1,200 a month.