SSS plans to hike contributions from 0.6% to 11% a month

Published by rudy Date posted on April 6, 2011

THE Social Security System wants to increase its members’ dues to 11 percent of their salaries a month from 0.6 percent now to improve their package of benefits, the pension fund’s president and chief executive Emilio de Quiros Jr. said Tuesday.

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

“But the present system has impediments that hinder the workers from saving more.”

De Quiros said the private employers and employees would share the dues equally. The 11 percent contribution based on the workers’ monthly pay would add seven years to the fund’s life and increase the members’ benefits.

The maximum monthly salary credit, the ceiling that serves as the basis for contribution payments, would rise to P20,000 from P15,000 now.

But without the increase in dues, the benefit payments would put a strain on the fund and shorten its actuarial life, which was expected to last until 2039 based on a projection made in 2007, De Quiros said.

The increased membership dues would allow the fund to give pensioners a one-time P500 grant, a 10-percent across-the-board increase in pensions, and higher computed benefits for active members.

De Quiros said the current SSS contribution rate of 10.4 percent was less than half that in the public sector under the Government Service Insurance System, which is 21 percent.

The average contribution rate in Asia was 23 percent, and in Europe 35 percent,De Quiros said. “If the SSS does not start to make small adjustments now, the time will come when it will be forced to increase contribution rates significantly to ensure that those paying contributions today will get pensions in the future,” he said. –Elaine Ramos Alanguilan, Manila Standard Today

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