THE pension adjustment has not yet been implemented but the country’s economic planners are already thinking of increasing member contributions.
The grant of a pension adjustment to reflect the growing needs of retirees and other pensioners could only be covered by an increase in the amount of money being put in by Social Security System (SSS) members. Such is the logic of Cabinet members that you wonder what bright idea they would resort to when the system’s about to go bankrupt.
While those aged 60 and above enjoy higher pensions, their working family members who try to help in the expenses of their elderly parents are forced to contribute more. Out of the 2.2 million pensioners to benefit from the pension increase, many continue to live with their children or other relatives. What they gain in additional pension, their children who help support them spend more in terms of SSS member contributions.
Pensioners are expected to start receiving an additional P1,000 in their monthly SSS pension in January 2017. The Senate and House of Representatives issued a joint resolution stating the pension hike would be given on a staggered basis-- P1,000 in January 2017 and P1,000 in January 2019. The resolution is set to be signed by President Rodrigo Duterte who had included the pension increase in his campaign promises.
But three department heads said Sunday SSS member contributions should be increased to cover the expected losses from the P2,000 pension hike. The SSS had said it would lose P26 billion should the additional P2,000 monthly pension be implemented, cutting the actuarial life of the fund by 14 to 17 years from 2042 to 2025-2028.
Finance Secretary Carlos G. Dominguez III, Budget Secretary Benjamin M. Diokno, and National Economic and Development Authority Director-General Ernesto Pernia issued a statement on the risks of increasing pension without a corresponding hike in member contributions. “We strongly recommend that any improvement in pension benefits be accompanied by an upward adjustment or restructuring of the contribution rate from employee members and their employers, as well as self-employed and voluntary members,” they said in a statement addressed to President Duterte.
While pensions have increased 22 times, they said, the contribution rate has gone up only three times since the setting of the rates in 1980. From the current 11 percent member contribution, they want it adjusted to 17 percent upon the implementation of the pension increase.
It makes you wonder if these economic planners have thought of other ways to offset the pension increase.
When President Benigno Aquino III vetoed Congress’s proposal on the pension hike in January last year, critics like the Philippine Association of Retired Persons put forward other measures to ensure the SSS would not go bankrupt. Among them are the amendment of the SSS law to require it to set aside at least 30 percent of its net annual income to a fixed fund for the purpose only of increasing pensions across the board regularly and the inclusion in the SSS Board of Trustees of three members representing retirees by increasing the number of trustees from seven to nine and eliminating the lone representative of the general public.
That critical part of where to get the funds for the pension increase remains unclear.
(ninicab@sunstar.com.ph)