MANILA – The Social Security System (SSS) is eyeing to raise monthly contributions starting April, which is expected to raise P45 billion in additional collections and extend its fund life by 12 years.
SSS President and Chief Executive Officer Emmanuel F. Dooc said the pension firm has submitted a written request to President Rodrigo R. Duterte to issue an executive order that would raise the monthly contribution rate to 14% starting April this year, coming from the current 11%.
The official added that the request also covers their proposal to raise the minimum salary credit to P4,000 from P1,000, as well as the credit cap to P20,000 from P16,000 currently.
“The combined results if we succeed in getting all these requests approved by the President is we will be able to collect more or less P45 billion in additional contribution revenues starting from April to end of this year,” Mr. Dooc told reporters during a press briefing of the agency’s Sulit Conference 2018 at the Crowne Plaza Manila.
Mr. Dooc said the letter was submitted to Finance Secretary Carlos G. Dominguez III last week, who has been reviewing the proposal before endorsing it to Mr. Duterte. After this, the Social Security Commission — the highest decision-making body in SSS — needs to adopt the order before it is implemented.
In January last year, Mr. Duterte approved a P2,000 across-the-board increase in monthly pensions for retired private sector workers. The first increase worth P1,000 has been already disbursed to pensioners in March 2017, while the second tranche is eyed by 2019.
SSS intends to raise its contribution rate by 1.5 percentage points (ppt) on an annual basis until it reaches 17%. Their latest request involves adjusting the rate by three ppts to cover the years 2017 and 2018.
The state-run pension firm had asked Mr. Duterte to increase contribution rates last year, but was postponed so that it could be timed with the reduction in income tax rates for salaried workers. Currently, the 11% contribution rate is being shouldered by the employer (7.37%) and the employee (3.63%).
The SSS is counting on Mr. Duterte’s issuance of an executive order as they await Congressional approval on proposed amendments to the agency’s charter, which will effectively empower its Commission to increase contribution rates by itself.
Mr. Dooc said a presidential decree would be the “faster way” to secure the contribution hike, as the proposed bill is yet to be tackled at the Senate.
The official said the additional collections will prolong the fund life of the SSS, following the bigger benefits they have been paying out since last year.
“We will increase the fund life from the current 2032 to I think 2044, which is even better than the previous fund life before we gave the first P1,000 tranche at 2042,” the SSS chief added.
Mr. Dooc added that the additional P45 billion collections is still a rough estimate, as the figure could go higher should the SSS see more paying members and new employers.
Ideally, the pension fund should last 70 years.