State-run Social Security System (SSS) said its new contribution schedule as well as workers’ investment and saving program (WISP) will be implemented starting next year.
Pursuant to Republic Act No. 11199 or the Social Security Act of 2018, Aurora C. Ignacio, SSS president and chief executive said the pension fund’s contribution rate would be set at 13 percent from the current 12 percent next year.
Ignacio said the minimum monthly salary credit (MSC) would also be adjusted to P3,000 from the current P2,000, except for Kasambahay and overseas Filipino worker (OFW) members.
“As to the contribution share of the employer and employee, the additional one percent will be equally divided, thus the employer share will be at 8.5 percent from 8 percent, while the employee share will be at 4.5 percent from 4 percent,” Ignacio said.
“It applies to employed members, land-based OFW members in countries with Bilateral Labor Agreements with the Philippines, and sea-based OFW members,” she added.
Historically, from 1980 to 2016, the contribution rate was increased only four times, while pensions were increased 22 times, Ignacio explained.
Further, a P1,000 additional monthly benefit was implemented in 2017 for all pensioners without a corresponding adjustment in the contribution rate, which caused a reduction in the SSS fund life of 10 years.
“Thus, a year later, the Social Security Act of 2018 was enacted. The new law provided, among others, a schedule of increases in contribution rate as well as the minimum and maximum MSCs up to 2025,” Ignacio said.
“Upon full implementation, the reforms under it will offset the adverse financial impact of the additional monthly benefit granted in 2017,” she added.
On the topic of the second tranche of the P1,000 pension increase, Igancio said “SSS understands its pensioners’ plight and recognizes the good intention of granting the second tranche of the P1,000 additional monthly benefit.”
However, she explained to grant such additional benefit allowances, the actuarial soundness of the SSS must be guaranteed thorough studies, especially now that there is a pandemic and the collection of contributions experienced a significant decline.
“We must ensure that our current and future generation of members, pensioners, and their beneficiaries have access to social security protection through the programs that the SSS offers,” Ignacio said.
On the other hand, the SSS also presented the features of the WISP, a safe, convenient, principal-protected, and tax-free individual retirement savings plan, which will serve to augment member savings from the regular program.
Since the regular program puts a cap of P20,000 MSC in calculating benefits, the WISP will cover the contributions more than the P20,000 MSC up to the prescribed maximum MSC.
Coverage under the WISP will be automatic to all private-sector employees, self-employed individuals, OFW, and voluntary members who have no final claim in the regular SSS program, have contributions in the regular SSS program, and have an MSC that exceeds P20,000.
Contributions in WISP shall be paid together with contributions in the regular SSS program.
“It allows faster accumulation of a worker’s savings because of the employer share in the contribution,” Ignacio said.
“Moreover, WISP contributions will be invested following the principles of safety, high yield, and liquidity, and as provided under the SS Act of 2018, which will yield additional pension income for contributing members,” she added.
Earnings realized from them will be distributed proportionately based on the member’s contribution.
The total accumulated account value (AV) of the member under the WISP will be the basis of his/her additional benefits, which will be given at the same time during his/her retirement, total disability, and/or death benefits.
Benefits will be given in annuity or lump sum, depending on the manner of payment of his/her benefit under the regular SSS program.
The annuity will be given in the form of a fixed amount monthly pension, to be paid until the member’s AV is fully settled, covering at least 15 years.