The planned hike in members’ contribution rate to 14 percent from 11 percent at present is expected to be implemented in April as top officials of the state-run Social Security System (SSS) expect President Rodrigo Duterte to approve their proposal soon to compensate for the impact of last year’s pension increase on the fund life.
SSS president and chief executive Emmanuel F. Dooc told reporters Tuesday that the Social Security Commission sent a letter to the President through Finance Secretary Carlos G. Dominguez, which requested a 3-percentage points increase in the contribution rate to cover the years 2017 and 2018.
The SSS was unable to implement the contribution rate increase as initially scheduled in May last year as it awaited passage of the Tax Reform for Acceleration and Inclusion (Train) Act.
Dooc said the commission also sought to increase the minimum monthly salary credit to P4,000 from P1,000 at present, as well as the maximum cap to P20,000 from P16,000.
“If we succeed in getting all these requests approved by the President, we will be able to collect more or less P45 billion in additional contribution revenues starting from April to the end of this year,” Dooc said.
The higher contribution rate will allow the SSS to extend the fund life to 2044 from the current 2032, which Dooc said would be “even better” than the prevailing fund life of until 2042.
President Duterte had ordered that the SSS members’ contribution rate be raised in increments of 1.5 percent per year until 2020 to reach 17 percent from the current 11 percent.
The contribution rate hike is necessary because the SSS’s actuarial life will be reduced by 14-17 years to 2025-2028 if members’ contributions will not be increased.
Duterte, in January last year, approved a two-stage monthly pension hike of P2,000, of which P1,000 per month were already being disbursed to pensioners since March.
The latest SSS data showed that its net income plunged to P9.69 billion as of end-November last year mainly because of the pension increase.
Dooc said the implementation of the contribution rate hike is expected to be “faster” if the President or the Executive Secretary will issue a circular or memorandum similar to the one issued by Mr. Duterte last year to implement the pension increase.
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