Private pension fund Social Security System said Friday it may not increase the monthly contribution of members amid the possible implementation of the P2,000 across-the-board pension hike.
Newly-appointed Social Security Commission chairman Amado Valdez said in a press briefing SSS would propose six options if the P2,000 pension increase was signed into law.
SSS’s maximum life is expected to reach 2027 if the pension increase is staggered P500 annually.
The option calls for a P500 increase to all pensioners for four consecutive years starting in 2017 until it reaches the full P2,000 by January 2020. This will cost the pension fund P56 billion more annually.
SSS paid about P102 billion in pensions in 2015.
Another option seen by SSS is the implementation of the pension increase on a yearly and age group staggered basis.
“Under this option, pensioners are arranged by age and divided into five tranches. The first tranche includes the oldest pensioners,” SSS said.
It said the first group will receive the P2,000 monthly pensions increase in 2017, followed by the second in 2018 and so forth. This will cut the fund life to 2025.
Former President Benigno Aquino III vetoed the SSS pension hike in January following the recommendation of then Finance secretary Cesar Purisima after noting that the pension fund life would be cut by 27 years from the current life of until 2049.
Valdez told reporters the agency would not raise contributions and instead use the remaining 10 years after the hike to “catch up” to lengthen the pension fund.
Valdez, however, said that the 10-year period would not be a “comfortable period” and a “challenge” to SSS.
“This is where patriotism comes in. It’s a cooperative effort… One possibility is to ask for government subsidy from Congress. But that will also be hard,” he said.
SSS said in a position paper submitted to the House of Representatives that a 17-percent increase on members’ monthly contribution would likely offset the possible revenues losses if the P2,000 across-the-board pension increase pushed through in the new administration.
SSS said in presentations to the House Committee on Government Enterprises and Privatization that the P2,000 pension hike was possible as long as a funding mechanism would sustain the life of the pension fund.
Committee members agreed to adopt similar legislative measures previously approved by the 16th Congress.
SSS chief actuary and senior vice president George Ongkeko Jr. said the SSS had always been supportive of the proposal to increase SSS pensions as long as provisions on the additional sustainable source of funding was included to avoid the shortening of the fund’s life.
“We are one with legislators in their desire to provide higher pensions for SSS pensioners. However, we also have to look after the welfare of other SSS members and ensure that the SSS fund life is intact,” said Ongkeko.
