SSS: 5 members paying for single pensioner

MANILA, Philippines – Improving collection efficiency will not solve the Social Security System (SSS)’ problem of not having the funds to cover the proposed increase in retirees’ pension.

“Collection efficiency is not the solution,” Michael Victor Alimurong, representative of the general public to the SSS commission, said yesterday.

He said the situation is tantamount to having five SSS members pay for a single pensioner every month.

According to SSS data, 33 million members pay an average of P1,100 per month as against the average P3,200 granted as pension to 2.15 million retirees and their dependents.

Each member makes contributions for an average of only nine months while retirees and their dependents receive payouts for 12 months plus one-month bonus.

Of the 33 million SSS members, only 12 million are “actively paying,” translating to collection rate of only 38 percent.

Alimurong said it is hard to collect from delinquent payers as most of them are from the informal sector.

“This is not the answer,” he said, referring to improving collection efficiency. “Why? Because 75 percent of our members are from the informal sector – those people who have no capacity to sustain payments every month,” Alimurong told a news briefing.

“People are saying SSS is anti-poor. But wouldn’t it be more anti-poor if we force these people to pay? Remember, you are an SSS member even if you just pay for one month of contribution,” he explained.

Last week, President Aquino returned House Bill No. 5842 to Congress unapproved, explaining the proposed hike would leave the SSS fund depleted by 2029, or much earlier than the original projected actuarial life of the pension fund until 2042.

SSS president and chief executive officer Emilio de Quiros Jr. said the ideal fund life should be 70 years, which is “still a long way to go” even at current levels.

While the fund’s financial performance has improved under Aquino, de Quiros said gains could easily be reversed if the pension hike is approved without a commensurate increase in contributions.

“What we are just saying is that now, the SSS performance is good, which we hope the next administration will continue. We are not saying we cannot do it (pension hike) ever. Maybe at some point in time, we can do it,” de Quiros said.

In response to public clamor, Aquino ordered a study on the possibility of hiking pensions by P500. But de Quiros said even this would cut the SSS fund’s life if there are no additional contributions.

“That would still result into shortfalls and would require us to get money from our investment earnings,” he said.

Financial performance

Pension hike advocates have argued that SSS has enough capacity to fund the hike – which would cost P56 billion in its first year alone – if the pension fund improves its collection performance.

SSS figures showed that the agency has achieved contribution surpluses since 2012. This means the This means the amount of contribution it gets is enough to finance not only pensions, but also its daily operations. –Prinz Magtulis (The Philippine Star)