A more viable Social Security System

Published May 28, 2018, 12:05 AM

by Mario Casayuran and Vanne Elaine Terrazola

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The Senate will have an opportunity to correct certain basic flaws in the law that governs the operation of the Social Security System (SSS), when it takes up today Senate Bill 1753, An Act Rationalizing and Expanding the Powers and Duties of the Social Security Commission (SSC) to “Ensure the Long-term Viability of the Social Security System” sponsored by Sen. Richard Gordon, chairman of the Senate Committee on Government Enterprises.

The SSS found itself at the center of attention in recent months over a move to increase the pensions of private-sector retirees, many of whom really deserved help as their pensions were way below their needs in their old age. After the election of President Duterte, the SSS was able to raise the monthly pensions by R1,000. Another R1,000 increase is planned this year, but unless certain changes are made, the SSS may not be able to remain a viable organization.

The present law, the Social Security Act of 1997 – Republic Act 1161, as amended by RA 8282 – puts a ceiling of R16,000 on the monthly salary credit of all private-sector workers. Everything is based on this ceiling – the monthly deductions, the computation of various benefits, the eventual pensions upon retirement. This ceiling is obviously way below the monthly pay of most private sector employees. Because of this unrealistic ceiling, SSS collections are way below what they should be and so are the benefits that are necessarily linked to collections. The Government Service Insurance System (GSIS) does not have this ceiling.

Senate Bill 1753 seeks amendments to make the SSS a more viable and a more effective social security organization. It seeks to expand the investing power of SSS so it can invest in publilc-private partnership programs and in equity investments, rather than only in bonds at present. It seeks to allow the SSC to condone the penalties of delinquent employers and employees, so they can make a new start. It seeks to set up a provident fund for members to serve as further savings, aside from their monthly contributions. It seeks to allow the SSS to offer pension loans to its pensioners.

It seeks to include overseas Filipino workers (OFWs) in its mandatory coverage program. In 2016, there were only 582,896 OFWs dealing with the SSS, when there were an estimated 2.3 million Filipinos working all over the globe.

And, very important, the bill proposes that the SSS be able to carry out its work, improve its contribution schemes and its benefits, without needing the approval of the President of the Philippines. Thus, any decision to improve contributions and benefits will no longer be a political move, but according to the best judgment of the SSS and its professional actuarial officials.

We urge the members of the Senate to give support and approval to these proposals designed to enable the SSS better serve its members and the nation as a whole.

 
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