Wednesday, August 21, 2019

Cabaero: Pension hike redux

LEGISLATORS studying the proposal to increase monthly pension by P2,000 are optimistic a final resolution would be submitted to President Rodrigo Duterte for his approval before the year ends.

Such optimism is welcome in these times of mixed signals and shifting government policies. Here is one clear direction the public could confidently look forward to in the next weeks.

But a closer look at discussions at the Senate and House of Representatives committees looking into the pension increase does not provide anything new compared to past attempts to have the measure passed. What has changed in deliberations now from actions of the past Congress?

The only difference is in the country’s leadership. Duterte is known to be pro-people. His predecessor, President Benigno Aquino III, was sympathetic but wary of rendering the Social Security Services (SSS) bankrupt. Aquino vetoed the pension hike until the SSS could come up with ways to get the funds to cover the increase.

That critical part – where to get the additional funds – remains unclear, based on the usual points that cropped up during deliberations on the proposed increase.

The Senate committee on government corporations and public enterprises passed the bill on the pension hike, together with the committees on labor, employment and human resources development, health and demography, and finance. The measure called for a P2,000 across-the-board hike in the monthly pension of SSS retirees.

Sen. Cynthia Villar, one of the authors of the bill, said she expects the measure to be signed into law by Duterte before the year ends. “The passage on committee level of the bill is our early Christmas gift to the 1.9 million SSS pensioners,” Villar said.

At the House of Representatives, the committee on government enterprises and privatization approved a motion for the omnibus approval of 15 bills granting the pension increase in varying amounts. The committee approval means the bills will be presented on second reading in plenary session.

Both the Senate and House are on two-week break until November 6.

When sessions resume, they are expected to come up with a joint resolution for the signature of President Duterte.

During the Senate hearing, committee members asked George Ongkeko Jr., SSS senior vice president and chief actuary, to improve collection efforts to be able to cover the increase or ask government for a subsidy to prevent bankruptcy.

Ongkeko had said even a P500 increase in pension could result in a 1.5 percent increase in contribution each year. A P2,000 across-the-board pension increase for all 2.1 million pensioners would cost the SSS some P56 billion. Its annual investment income is at only P30 billion. This would result in a deficit of P16 billion to P26 billion annually.

The problem is no new solution has come up to address this expected deficit. The same proposals were filed and their approval is set for the end of the year. But the ways to fund the increase are still unclear.

Legislators should temper their pension-granting sentiment with the challenge of coming up with ways to implement the increase without putting to risk the social security of workers and those to retire soon.

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