5 Reasons Why the SSS Pension Must be Increased by P2,000

President Benigno Aquino vetoed the proposed law increasing the monthly Social Security System (SSS) pension by P2,000. According to President Aquino, the pension increase will result in the bankruptcy of the SSS in the next 11 years. If we ask the millions of retired workers, they will most likely say that the existing pension is not enough for their daily subsistence. One of the sponsors of the propose law, Senator Cynthia Villar, explained the reasons why the monthly SSS pension should be increased by two thousand pesos (PhP2,000) across the board. Here are portions lifted/revised from the sponsorship speech of Senator Villar:

Purpose of SSS

SSS was created to establish, develop, promote and perfect a sound and viable tax-exempt social security service suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden. It appears that the basis for which SSS was established is at work.

Long Overdue

The Social Security legislation provides for monthly pensions of retirees. The minimum pension is one thousand two hundred pesos (P1,200) for members with at least ten (10) credited years of service and two thousand four hundred pesos (P2,400) for those with twenty (20) credited years of service. The minimum monthly pension under this law was adjusted several times through legislation or other issuance for it to be as much as possible adequate for retirees to face the rising costs of living. It has been 18 years since the Social Security Law was amended. And there is no doubt that since then, the cost of living being faced by pensioners has risen.

Below Poverty Threshhold

The monthly poverty threshold for a family of five is an average income of PhP8,000 per month (as per the latest data from National Statistical Coordination Board). This amount is enough to cover a single family’s basic food and non-food needs. Poverty threshold refers to the minimum income a family or individual must earn in order to be considered “not poor”.

Because the retirees are receiving a monthly pension of between P1,200 and P2,400, they fall under the poverty line. In fact, even if we add P2,000 to their monthly pension, they will still fall under the poverty line. They will still be labeled as “poor”. According to SSS, as of April 2015, the average pension that they are giving their 1.9 million pensioners is 3,169 pesos, which is still below the poverty threshold.

It’s a sad reality that majority of retired workers in our country rely solely on their monthly pension for their upkeep. On a daily basis, it would barely cover for their sustenance. We must also consider that many of them, given their old age, may even have maintenance medicines and special requirements that add to their daily living expenses.

Priority and Fairness

We can’t blame the SSS pensioners from criticizing the SSS, when the SSS board of directors received a P10M bonus in 2013. In 2009, the retirement packages of SSS board members reached P200M.

Besides, the monthly pension received by retirees is almost comparable to the amount given to the recipients of the Pantawid Pamilyang Pilipino Program, or what is called the Conditional Cash Transfer (CCT), at an amount of 1,400 pesos a month. In 2015, the Pantawid Pamilya Program or CCT proposed a budget amounting to over 62.6 billion pesos. If the proposed 2,000-peso increase in pension benefit will be granted, it will cover 1.9 million pensioners; multiplied by 13 months. We must remember that even with the proposed 2,000 pesos increase in their monthly pensions, majority of the pensioners will still live below the poverty threshold. Our retired workers or pensioners deserve subsidy from the government, in the same way that the recipients of CCT grants do. If the government has subsidized those who are not working, it’s only fair that the government also assist the retirees who worked for two or more decades.

SSS must Work Better

The SSS is concerned about the impact of the proposal to the SSS fund. Currently, SSS fund life is up to 2042. In other words, the SSS has enough funds to cover benefits and other expenses until the year 2042, or 27 years hence. The P2,000 increase will reportedly shorten the SSS life until 2029. However, 2029 is still a good 14 years away. They can still come up with creative ways to lengthen their fund life. They have done it before. In 2001, the fund life of SSS was only five years or until 2006 only. They found a way.

SSS is proposing an increase in the contribution rate of its members–from the current 11 percent to 15 percent–to maintain their fund life at 2042. Based on SSS average monthly salary credit of roughly about 9,500 pesos, the contribution will move from 1,045 pesos to 1,425 pesos or a 380-peso increase. If we apply the ratio of two-thirds employer and one-third employee, additional contribution as shown for the average contribution amount, the total of 380-peso increase, the breakdown would be 255 pesos roughly for the employer and 125 pesos for the employee. The distribution of SSS contribution is roughly two-thirds employer and one-third employee. For the self-employed, voluntary contributors and the overseas Filipino workers (OFWs), they pay the full amount of contribution.

But SSS has billions of unremitted collections and uncollected premiums. They should at least improve their collection efforts first, before thinking of increasing members’ contribution–which seems to be the easiest thing to do for them. It’s the responsibility of SSS to find more creative ways so it can lengthen the life of SSS fund, but not at the expense of members. They have ample time to work on it.

Leave a Reply

Your email address will not be published. Required fields are marked *