State-run Social Security System (SSS) warned that the suspension of the scheduled increase in member-contribution will considerably strain the already dire financial position of the pension fund.
During the House Committee on Government Enterprises and Privatization hearing, SSS President and Chief Executive Officer Aurora C. Ignacio strongly opposed all pending bills seeking to defer or altogether stop the implementation of the contribution hike.
Ignacio said these House measures, which aim to overrule the Republic Act No. 11199 otherwise known as the Social Security Act of 2018, “tend to weaken, rather than strengthen” the SSS.
“Postponing or stopping the implementation of the increase in member contribution will further exacerbate our already dire financial position,” Ignacio told the lawmakers.
Based on the SSS studies, the pension fund would lose P41.37 billion if it fails to implement the contribution hike, which will ultimately result in a pension deficit of P14.9 billion for this year alone.
She also noted that the suspension will further increase the SSS’ unfunded liability that is already in trillions of pesos.
While the contribution hike will take a toll on members’ monthly income, Ignacio noted that this additional cost is “relatively small.”
For employed members, the additional contribution will range from P15 to P100, while from P30 to P200 for self-employed and voluntary members and from P80 to P200 for overseas Filipino worker members.
“The small scheduled increase in contributions would be equivalent to around P41 billion of benefits and loans to 3.3 million beneficiaries,” Ignacio said.
“This amount should continue to enable the SSS to grant even more benefits and loans for the greater good of the SSS membership, both present and future,” she added.
Aside from additional benefits and loans, Ignacio also said that the increase in contribution will help the SSS to weather on the coronavirus-induced global economic crisis.
Ignacio disclosed that the implementation of several COVID-19 response programs last year to support its members have considerably strained the SSS’ liquidity.
These COVID-19 response programs include extension on contribution payment deadline, advance pension, calamity loan, unemployment insurance benefit and moratorium on loan payments.
“The SSS, therefore, respectfully expresses its opposition to the proposals because of their expected adverse financial impact to the financial health of the SSS, and eventually, on the benefits of pensioners, members and their beneficiaries,” Ignacio said.
“At this time of the COVID-19 pandemic, when members and pensioners have clamored for heightened benefits, including allowable loans, we would expect that proposed measures should clearly strengthen the SSS, not weaken it financially,” she added.
“Stopping the collection of this considerable amount would clearly weaken our institution established to provide social protection,” the SSS chief concluded.