Pension inequity with GSIS cited
Raising the contribution rate of Social Security System (SSS) members to 14 percent would make the pension fund for private workers at par with that of government employees, Social Security Commission chair Amado D. Valdez said Thursday.
“We are pushing for a gradual increase in the contribution rate and monthly salary credit (MSC) because we want pension equity among workers in the government and in the private sector,” Valdez said.
“Government retirees have higher pension because their contribution rate is at 21 percent of their actual salary as compared with those working in the private sector, whose SSS contributions are only 11 percent of their salary capped at P16,000,” Valdez explained, referring to the higher contributions being collected by the Government Service Insurance System (GSIS) from government personnel.
“For example, a private sector employee who earns P25,000 only contributes P1,760 based on a P16,000 maximum MSC to the SSS while a government employee who earns the same amount contributes P5,250 to the GSIS. This results in a significant difference between the amount of pension being received by a private worker and a government employee. And this is what we want to address to make the pension of private workers at par with those in the government,” Valdez explained.
Executive order
As such, the SSS is seeking President Duterte’s approval of an executive order to raise the contribution rate from 11 percent at present to 14 percent, of which the bigger amount equivalent to 8.87 percent will be shouldered by the employer.
The SSS was also pitching to jack up the minimum MSC to P4,000 from the current P1,000, while the maximum MSC will be increased to P20,000.
The combination of hiking the contribution rate as well as the minimum and maximum MSCs would raise the minimum and maximum contributions of SSS members to P560 from P110 and to P2,800 from P1,760, respectively, Valdez said.
Higher benefits
“The increase in contribution is only about P450 for those who will pay at the minimum MSC of P4,000 while those earning at least P20,000 will only add P1,040 to their monthly SSS contributions. We wish to thank in advance our employers who will share half of the increase in their employees’ SSS savings,” he said.
According to Valdez, “majority of SSS members who pay at P10,000 MSC would have a corresponding increase of P300 in additional contribution under the proposed pension reform agenda.”
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