THE SOCIAL Security System (SSS) said the need for additional benefit adjustments and the new challenges brought about by the changing times require deliberate structural changes for the country’s pension fund.
SSS president and chief executive officer Emilio de Quiros Jr. said Filipino workers and pensioners have sought meaningful benefits for the past many years, which is not possible unless the pension structure is updated.
“The SSS operates on the principle of forced savings and cross-subsidy to enable to accumulate savings for retirement,” De Quiros said. “But the present has impediments that hinder the workers from saving more.”
Last week, the SSS started consultation meetings with labor representatives, employers’ groups and other stakeholders on upgrading benefits, which would require boosting revenues from contributions.
The SSS contributions rate of 10.4 percent of the monthly salary is less than half of the rate in the public sector under the Government Service Insurance System, which is 21 percent of the monthly salary. The average contribution rate among Asian countries is 23 percent and 35 percent among European countries.
De Quiros said SSS planned to raise its contribution rate by 0.6 percent to 11 percent of the monthly salary, to be equally shared by employers and workers — a move that would add seven years to its fund life and provide leeway for benefit enhancements.
Without structural reforms, benefit increases would strain the fund and shorten its actuarial life, which at present is projected to last until 2039, according to the 2007 actuarial valuation, De Quiros said.
He said, the increase would allow a P500 one-time grant to pensioners, 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 10 percent across-the board increase and P500 grant,“ De Quiros said.
“If SSS does does start to make small adjustments now, the time will come when it will be force to increase rates significantly to ensure that those paying contributions today will get pensions in the future,” he said. [SSS 11]
