By Chino S. Leyco
State-run Social Security System (SSS) said yesterday that the pension fund may begin to implement the higher contribution rate before June this year, and not starting today.
Emmanuel F. Dooc, SSS president and chief executive, said that while Republic Act (RA) 11199 or the Social Security Act of 2019 will take effect today, the measure will still wait for the approved and published Implementing Rules and Regulations (IRR) before the increase in members contributions is imposed.
Dooc said that based on their assessment, the new rate will begin around April or May this year.
According to the SSS, an approved IRR is necessary to properly implement the law, especially on its new features including the increase in contributions.
Based on the published copy of the law, the Social Security Commission (SSC) is given not more than 90 days after effectivity or until June 3, 2018 to draft and publish the IRR.
“The Commission shall promulgate the necessary rules and regulations to implement this Act not later than ninety days after its effectivity,” Sec. 30 of the law read.
Under RA 11199, the monthly contributions of the SSS members will have a series of increases beginning this year with its initial one percentage point to 12 percent from the current 11 percent.
The monthly member’s contribution, which is shared by the employee and the employer, will likewise gradually rise every other year until the rate reaches at 15 percent by 2025.
According to the SSS, the increase is necessary to improve the fund life of the pension fund which was partially depleted by the increase in pensions.
Based on the estimates, the additional contribution from members beginning 2019 will immediate raise the SSS’ actuarial life by additional six years.
The higher contribution rate will also help the SSS to compensate for their additional expenses incurred in the granting of P1,000 across the board increase in pension benefits that was given by President Duterte in 2017.
Along with member’s contributions, the new SSS act also gradually raised the minimum and maximum monthly salary credits (MSC), or the basis for the contribution payments, currently at P1,000 and P16,000, respectively.
Under the new payment scheme, the minimum MSC starting this year will be at P2,000 while the maximum is at P20,000. These floor and ceiling rates will further increase every other year until they reach P5,000 and P35,000 by 2025, respectively.
Likewise, the sharing contribution mix between the employer and employee is also revised from present 7.37:3.63.
Based on the new SSS charter, 8.0 percent of the 12 percent monthly contribution will be shouldered by the employer, while the remaining by the employee. Ultimately by 2025, the sharing scheme will be 10 percent and 5.0 percent for the employer and employee, respectively.