Proposed SSS premium hike—the real issue

ONE of the most vehement objections to any increase in Social Security System (SSS) premiums has been voiced by the Kilusang Mayo Uno (KMU). It has accused the SSS of “lying to its members and the public in trying to justify a premium hike.”

This statement was attributed to Roger Soluta, KMU secretary-general. He also said the SSS “may simply be trying to increase a source of funds for the Aquino [administration’s] Public-Private Partnership Program.” I think this charge is rather wild and baseless.

But the KMU’s not-so-wild speculation is that the SSS may be trying to amend its own charter to change the sharing in employer-employee premium contributions from 70-30 to 50-50.

As I said, it was in 2010 when SSS President and Chief Executive Officer Emilio de Quiros Jr. first floated the idea of raising the SSS premium to extend by 70 years the actuarial life of the agency’s trust fund. Otherwise, he said, the SSS pension fund would run out by 2039.

Now it has been almost three years and we’re in the middle of 2013 (my, how time flies) and the fund’s actuarial life expectancy is down to 26 years. Yet, the proposed five-step premium increase devoutly wished by de Quiros for the next 10 years remains in the realm of fantasy.

What could be preventing at least the first of the five-step increase from happening?

Susie Bugante, SSS vice president for corporate affairs and communications, let on during a recent radio interview (Business is Our Business, DWIZ, 882 MHz) that the proposed premium increases were being strongly resisted by employers.

The employers’ resistance became evident during exploratory talks between the SSS and the representatives of employers, Bugante said.

She added that the resistance seemed to soften only when the SSS floated the idea of a 50-50 sharing scheme in the proposed premium increase.

Bugante’s revelation seemed to confirm the KMU’s suspicion that there are moves to change the SSS premium- sharing scheme.

She revealed that the 70-30 sharing scheme in the monthly premium currently being paid by SSS members was based on the schedule of premium payments provided for in Republic Act (RA) 8282, which contained the latest amendments to the Social Security Act of 1954.

Although RA 8282 doesn’t specify the exact sharing ratio between employer and employee, the SSS is empowered to fix the rate “based on actuarial calculations and subject to the approval of the President.”

That’s what happened in 2003, when the monthly premium was only 8.4 percent and had to be raised by one point to 9.4 percent. And then it was raised by another point to 10.4 percent in 2007. These two successive 1-percentage-point upward adjustments were both shouldered by employers.

Thus, of the 10.4-percent premium, 7.07 percent is now being paid by the employer, while 3.33 percent is deducted from the employee’s monthly pay—roughly 70-30. If the employee’s monthly salary is P10,000, the employer’s share in the premium would be P707, while that of the employee is P333.

But as far as the various labor groups representing the 22million private-sector employees are concerned, any scheme to prolong the actuarial life of the SSS fund is largely the responsibility of the government.

Any further increase in the premium contributions must maintain the 70-30 sharing ratio, and that any attempt to dilute it in favor of the employers would not be acceptable.

The forerunner of the SSS was the Social Security Commission. This was created by President Elpidio Quirino in 1948 to honor the vision of President Manuel Roxas. It was Roxas, the first president of the republic, who first proposed the establishment of a social security system in the country.

The question that must now be bugging the SSS is whether it should give in to pressure from employers and allow a 50-50 premium-sharing scheme?

I think the SSS should hold the line at 70-30. All future increases in the monthly premium should strictly maintain this ratio.

Any attempt to water it down might be interpreted as a despicable, elitist move against the nation’s labor force.
E-mail: Omerta_bdc@yahoo.com, Butch del Castillo, Businessmirror