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Monday, August 19, 2019

Wenceslao: Finding money for the pension hike

A CERTAIN degree of ambivalence characterized public reaction to the announcement by Malacañang of President Rodrigo Duterte’s decision to raise the pension of Social Security System (SSS) members by P1,000 starting this month. The amount is short of the P2,000 pension increase that then presidential bet Duterte promised during the campaign period.

This is a bit of a turnaround from the President’s pronouncement early this month that the pension increase pushed by Congress won’t happen because this could cause the financial collapse of the SSS. The President heeded the advice of his economic managers who saw what former president Benigno “Ninoy” Aquino III did on the pension increase push.

The President received flak for his failure to make good his promise, prompting the “sipsips” among his people led by SSS chairman Amado Valdez to try saving face by proposing a win-win solution, which turned out to be the staggered increase (P1,000 now and another P1,000 in year 2019) with a corresponding fund-generating moves that include raising the premium contribution of active SSS members and their employers.

Pensioners naturally welcomed the move but active SSS members and their employers didn’t. The increase in the premium contributions are also being staggered, 1.5 percent every year added to the current premium contribution of 11 percent until that contribution reaches 17 percent. For this year alone, that would mean an additional P15 to P740 (depending on the employee’s salary rate) deducted from the worker’s wage with a management counterpart.

I think this is what we are getting from the interference by politicians in the running of the SSS, whose operation is funded from contribution by employees in the private sector: a forced pension hike that muddles the management of a private fund.

Now, if government thinks that it would be able to partly generate the money that would pay for the pension hike, it should think again. Sen. Franklin Drilon, a lawyer, said that it would be illegal for the SSS to give benefits by way of increasing the premium contributions of its members as stipulated in Republic Act No. 8282 or the Social Security Law. As a result, the SSS is now making it appear that the pension hike is independent of the hike in SSS premium contributions.

The possibility is therefore high that if the SSS will push through with the hike in SSS premium contributions, some individual SSS member or groups would go to court on the matter. Militant groups are also up in arms over this. I heard someone from the militant women’s group Gabriela say that the group might just do that. I think it should if only to clarify the legal issue.

Like any active SSS member, my concern is its long-term stability. That is why if government wants to dip its fingers into the affairs of the SSS, it should be on ensuring that its funds are not mismanaged. And the interference should not be tainted with politics, or the intention of scoring pogi points to the voters. If government cannot do that, then it better steer clear of the SSS.
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