The Social Security Commission (SSC) said that the scheduled increase next year in the monthly contribution of members of the Social Security System (SSS) will ensure the long-term viability of this pension fund and increase the benefits to be enjoyed by them and their beneficiaries.
In a statement, Finance Secretary and SSC Chairman Carlos Dominguez 3rd said the full implementation by 2025 of the restructured rates and other reforms set in Republic Act (RA) 11199, or the “Social Security Act (SSA) of 2018,” will offset the financial impact to the fund of the P1,000 increase in the monthly pension of all member-pensioners that was implemented in 2017.
The SSS is set to hike beginning in January 2021 its monthly contribution rate by one percentage point to 13 percent from the current 12 percent of their respective salaries, but not to exceed the prescribed maximum monthly salary credit (MSC).
Dominguez expressed hope that SSS members would see their higher monthly contributions as their savings and safety net against the future hazards of sickness, maternity, disability, unemployment, old age, death and other contingencies resulting to loss of income or financial burden for them and their beneficiaries.
He pointed out that the restructuring of the SSS contribution rate, along with the minimum and maximum MSCs and the other provisions of RA 11199, will “ensure the long-term viability of the SSS Fund, expand its coverage and provide more and higher benefits for its current and future members and their beneficiaries.”
The MSC is the determining factor for contributions and benefits, which is based on the member’s monthly earnings.
“Upon full implementation in 2025, the reforms under the SSA of 2018 will offset the adverse financial impact of the P1,000 pension increase granted in 2017,” Dominguez said.
Through the SSA of 2018, the SSS last year introduced the unemployment benefit for members involuntarily separated from their jobs, and extended the MSC cap for the computation of benefits to P20,000.
The upgrade in the MSC cap, meanwhile, increased the amount of benefits that members and/or their beneficiaries are entitled to receive, such as sickness, maternity, unemployment, retirement, disability, death and funeral.
“Any drop in collections may lead to cash flow and liquidity issues. This could endanger the SSS’ ability to provide its members and their beneficiaries with benefits and loan privileges,” said Dominguez.
Investments to be well-managed
However, he assured the public that “the SSS’ investments are well-managed and has allowed the pension fund to respond to the needs of members despite the drop in collections during the pandemic.”
From January to October 2020, the SSS disbursed a total of P159.47 billion in social security and employees’ compensation benefits to 3.56 million members and beneficiaries, representing a decrease of 2.6 and 4.8 percent, respectively, from the benefits released in the same period last year.
This decline is a result of the Covid-19 pandemic, which affected the number of benefit disbursements from late March to May.
However, benefit disbursements to SSS members and their beneficiaries started to slowly recover or increase in the following months with the easing of quarantine restrictions and continuous digitization of the SSS system.
SSS member loan releases from January to November 2020 totaled P58.03 billion for 3.2 million members, an increase of 54.5 percent (P20.48 billion) and 76.7 percent (1.39 million members), respectively, from the same period last year.
Pension loan releases from January to November 2020 reached P3.17 billion combined for 69,813 retiree-pensioners, an increase of 61 percent (P1.20 billion) and 11.5 percent (7,210 pensioners), respectively, from the same period last year.