SSS mulls ‘structural changes’ to provide additional benefits to members

MANILA, Philippines – The Social Security System (SSS), will put in place “deliberate structural changes” to be able to provide additional benefits to members.

SSS President and Chief Executive Officer Emilio De Quiros, Jr. said Filipino workers and pensioners have sought meaningful benefits for the past many years.

However, De Quiros said this is not possible unless the pension structure is updated.

“The SSS operates on the principles of forced savings and cross-subsidy to enable workers to accumulate savings for retirement,” De Quiros said.

He noted that the present impediments hinder the workers from saving more.

The agency has started consultation meetings with labor representatives, employer groups and other stakeholders on upgrading benefits.

The move is part of SSS’ plan to increase the contribution rate to 11 percent from the current rate of 10.4 percent.

The agency said the SSS contribution rate is less than half of the rate in the public sector under the state-owned Government Service Insurance System (GSIS), the state-owned pension fund for government employees.

SSS’ contribution rate is 21 percent of monthly salary.

The average contribution rate among Asian countries is 23 percent and 35 percent among European countries.

De Quiros said the move to raise the monthly contribution rate to 11 percent would add seven years to its fund life and provide leeway for benefit enhancements.

Furthermore, he said the maximum monthly salary credit – the ceiling that serves as basis for contribution payments – would be raised to P20,000 from the present P15,000.

This, he said would enable workers with bigger salaries to save up for retirement through higher contributions.

Citing previous valuations, De Quiros warned without structural reforms, benefit increases would strain the fund and shorten its actuarial life, which at present is projected to last until 2039.

As a result of the increase, De Quiros said SSS would be able to get a P500 one-time grant to pensioners, a 10 percent across-the-board increase in pension, and higher computed benefits for active members.

“Our actuarial study shows that the increase in contribution rate and higher ceiling would lengthen SSS fund life from 2039 to 2046 even with the 10 percent across-the-board increase and P500 grant,” De Quiros said. –Iris C. Gonzales (The Philippine Star)