New SSS chair backs proposed pension reforms

MANILA, Philippines — Newly-appointed Social Security Commission Chairman Amado Valdez has expressed support for lawmakers pursuing pension reforms, including the P2,000 pension increase.

"We understand the need for higher SSS pensions. However, merely mandating to grant across-the-board pension increase without any mention of how exactly the system will sustain it over the long term may not suffice," Valdez said in a statement released Friday.

About 13 bills are filed before the House of Representatives and another six bills are filed in the Senate regarding pension reforms.

The bills, however, failed to offer source of funding to sustain the additional benefits that amount to billions monthly.

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Valdez noted that the current defined-benefit system of the SSS is obligated to fund the members who are entitled to six types of benefits based on qualifying conditions.

"Widening the base for contribution collection is a short-term solution but the fund will eventually dry up by 2025 because right now, the return of every peso contribution is P16 on the average," the SSS chair said.

An additional P56 billion on the first year will be required to implement the P2,000 pension increase to fund the 12-monthly pensions and 13th month pensions of more than two million SSS pensioners.

The SSS suggested a corresponding increase in contribution rate, government subsidy or a combination of both as options for funding the increase.

Contrary to the Government Service Insurance System which applies a 21-percent monthly contribution rate on members, the SSS implements a lower 11 percent contribution.

"From 1980 to 2002, SSS pension increases of up to 20 percent were implemented a total of 19 times, sometimes even twice the same year, while the contribution rate remained pegged at 8.4 percent for the same 23-period which shortened the life of the fund," Valdez said.

Valdez said that the agency will continue to work to find ways to further enhance the system's efficiency.

The House committee on government enterprises and privatization has approved a measure granting a P2,000 monthly pension increase for SSS members.

President Rodrigo Duterte earlier said that he will approve the proposed SSS pension increase, which has been vetoed by his predecessor Benigno Aquino III last January. — Patricia Lourdes Viray