MEMBERS of state-run Social Security System (SSS) will have to pay higher contribution rate starting April 1.
The increased contribution rate was announced by SSS officer-in-charge Aurora Ignacio, following the signing of Republic Act (RA) 11199 or the Social Security Act of 2018.
Under RA 11199 inked on February 7, the contribution rates will rise to 12 percent from the current 11 percent.
This means that the minimum and maximum monthly salary credits of the state pension fund will be adjusted to P2,000 and P20,000, respectively, from the current P1,000 and P16,000.
Ignacio explained that the higher saving rates would let SSS members enjoy bigger retirement benefits.
“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more. The SSS is the cheapest and most accessible pension scheme. All workers, regardless of nature of employment, must save in the pension fund for their future retirement years,” she said.
“The good news is that those who will save more with SSS under the new maximum Monthly Salary Credit of P20,000 will have higher amount of benefits and loan privileges as the Monthly Salary Credit is one of the main factors used in the computation of benefits and loan privileges,” Ignacio added.
RA 11199 aims to ensure the long-term viability of the pension fund by rationalizing and expanding the powers and duties of the Social Security Commission, the policy-making body of the SSS, to generate better income for the benefit of its members and pensioners.
The Social Security Act of 2018 allows the SSS to raise the monthly contribution of its members by one percent every other year until it reaches 15 percent in 2025.
The SSS stressed that the one-percentage point hike in contribution rate remained “reasonable,” noting that employees earning P10,000 worth of monthly salary will only have to pay P400 from P363.30, while the employer will only add just P63.50 from their current share of P736.70.
SSS expects to collect an additional P31 billion, following the implementation of a gradual increase of monthly contributions.
The law will also add 13 more years to the fund life of the SSS up to 2045 upon full implementation of the law.
Ignacio explained that under the new law, employee whose monthly salary is P20,000 will enjoy a sickness benefit worth P600 per day from the current P480 per day and a monthly basic pension of P8,000 from P6,400.
“We hope that our members will understand the importance of adjusting contributions to make sure that the pension fund remains strong and viable for the current and forthcoming generations,” she said. (SunStar Philippines)