By: Marites Toledo
THE P2,000 increase on the pension of over 2 Million Social Security System (SSS) will proceed as a campaign promise of then presidential candidate Rodrigo Duterte, but the government’s top three economists are prodding the President to increase the monthly contribution of the funds’ members to 17% from 11% to offset the possible losses due to the pension’s increase.
In a statement, Finance Secretary Carlos G. Dominguez III, Budget Secretary Benjamin M. Diokno, and Socioeconomic Planning Secretary Ernesto M. Pernia said “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.”
The three expressed their stand as the P2,000 proposed increase is scheduled to release either before 2016 ends, or early January.
That is if Duterte affix his signature on the Joint Resolution of the Congress that approves the P2,000 increase.
However, it must be clear that only P1,000 will be released by next year, while the other half of the P2,000 will be given before the end of Duterte’s term.
Dean Amado Valdez, chairman of the Social Security Commission (SSC), said the increase will be released in two tranches to protect the SSS from bankruptcy.
The increase is expected to be released soon as the Senate and the House of Representatives approved their respective joint resolution.
In a memorandum to Duterte, Domingo, Diokno and Pernia said the proposal “may adversely affect the Republic’s credit rating” and that “SSS would be bankrupt with no funds for other members in the future.”
“While we recognize the thrust of the joint resolution to promote the well-being of the country’s private sector retirees… any increase in pension without increasing member contribution and expanding its membership base would introduce severe fiscal issues, and should be discouraged,” they said.
“We do not believe it is unfair to ask for this increase as pensions have increased 22 times while the contribution rate has only increased three times since the establishment of the rates in 1980,” they argued.
Allowing the increase of the pension without increase on the monthly contribution would have a “detrimental effects in the financial position of SSS and the viability of its business model.”
SSS officials said it would incur a P26-billion net loss should the proposal push through by next year if the monthly contributions are not increased to 27% from the current 11%.
However, Valdez said there is no need to increase the monthly contribution of the SSS members, rather the SSS should invest in big ticket projects like infrastructure so that the SSS could sustain its financial standing, while continuously increasing the benefits of all the funds members.