SSS to discuss structural changes today

Thursday, June 2, 2011

THE Social Security System (SSS) is set to conduct its first Luzon North Division stakeholders meeting today, June 2 at the Pines View hotel, Baguio City to discuss structural changes in the agency.

SSS president and CEO Emilio de Quiros will lead the team to gather proposals coming from at least 200 to 250 employers of Luzon. The meeting will also tackle upgrading members’ benefits.

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De Quiros said the SSS operates on the principle of forced savings and cross subsidy to enable workers to accumulate savings for retirement, but the system has impediments, which hinder workers from saving more.

This is the reason why it would require deliberate structural changes for the countries pension fund, he said.

The SSS contribution rate of 10.4 percent of the monthly salary is less than half of the rate in the public sector under the Government Service Insurance System or GSIS, which is 21 percent of the monthly salary.

The average contribution rate among Asian countries is 23 percent and 35 percent in European countries.

SSS plans to raise its contribution rate by 0.6 percentage points to 11 percent of the monthly salary, to be equally shared between employers and workers.

This move would add seven years to its fund life and provide leeway for benefit enhancements, de Quiros said.

De Quiros explained the maximum monthly salary credit -- the ceiling – which serves as basis for contribution payments will be increased to P20,000 from the present P15,000 to enable workers with bigger salaries to save up for retirement through higher contributions.

“Without structural reforms, benefit increases would strain the fund and shorten its actuarial life, which at present, is projected to last until 2039, according to the 2007 actuarial valuation,” de Quiros said.

He pointed out the increase would allow a P500 one-time grant to pensioners, 10 percent across-the-board increase in pension, a higher computed benefits for active members.

The SSS chief added the fund’s actuarial study shows the increase in contribution rate and higher ceiling would lengthen SSS fund life from 2039 to 2046 even with the 10 percent across-the-board increase and P500 grant.

“If the SSS does not start to make small adjustments now, time will come when it will be forced to increase contribution rates significantly to ensure those paying contributions today will get pensions in the future,” he added. (Jonathan Llanes)