Social Security System (SSS) President and CEO Michael G. Regino explained that the net loss amounting to P843.9 billion shown in 2021 unaudited financial statements is due to a change in accounting standards brought by Philippine Financial Reporting Standards (PFRS) 4.
“This increase in net loss from the previous year is due to the recognition of the Margin for Adverse Deviation (MfAD) in our policy reserves. MfAD serves as a buffer for conservatism, which we have considered in our financial statements beginning 2021,” Regino said.
Policy reserves are forward-looking estimates of net future liabilities, these comprise benefit payments that will be disbursed to SSS members and their beneficiaries in the future.
“These future liabilities need to be recognized now as these provide us an accurate view of our long-term financial standing, which serves as our guide, as well as for the government in ensuring that we will be able to continuously serve our current and future members and their beneficiaries,” Regino added.
However, Regino assured us that the said losses do not affect SSS' current cash flow and funding situation and is still financially capable of providing benefits to its stakeholders.
As a matter of fact, the agency's cash influx composed of contribution collections, investment, and other income for 2021, has reached P262 billion. It exceeded the outflows of P234 billion, composed of benefit payments and operating expenses, for the same year by P28 billion. (Luisa Cabato)