A senator is pushing for a congressional probe into reported massive net losses incurred by the Social Security System (SSS).
Senator Francis Tolentino aired his concern over the net losses amounting to P843.9 billion as shown in the 2021 unaudited financial statements of SSS.
Earlier, Tolentino filed Senate Resolution No. 1006, urging the Senate Committee on Government Corporations and Public Enterprises to conduct an inquiry in aid of legislation on the reported losses in the SSS’s unaudited financial statements.
The senator said this would ensure the state insurer’s financial viability and capacity to carry out its fiduciary responsibilities to the general public.
“The effect of the aforementioned reported losses should be scrutinized for the purpose of crafting laws and regulations that would provide further security to the agency’s long-term financial standing,” said Tolentino.
SSS President and CEO Michael Regino earlier explained that the multibillion net loss shown in its unaudited financial statements is due to a change in accounting standards brought by Philippine Financial Reporting Standards (PFRS) 4.
The increase in its net loss from the previous year is due to the recognition of the Margin for Adverse Deviation (MfAD) in policy reserves, Regino added.
But the senator said that with the increasing membership base of SSS, there is a need to revisit existing social security benefits guaranteed under the Social Security Act of 2018 to assist Filipino pensioners and beneficiaries in addressing their financial burdens.
As of April 2021, 40.49 million Filipinos are enrolled with SSS. About 76% or 30.77 million are employed members, while 5.03 million are voluntary paying members, 3.35 million are self-employed members, and 1.34 million are Overseas Filipino Workers (OFW) members, based on the latest data posted on the agency’s website.
Regino, however, assured SSS members and pensioners the reported losses do not affect the SSS’ current cash flow and funding situation and the fund remains financially viable in providing benefits to stakeholders.
In a statement, SSS said cash inflows composed of contribution collections and investment and other income in 2021 reached P262 billion, exceeding cash outflows of P234 billion composed of benefit payments and operating expenses in the same year by P28 billion.
“This increase in net loss from the previous year is due to the recognition of the margin for adverse deviation in our policy reserves. MfAD serves as a buffer for conservatism, which we have considered in our financial statements beginning 2021,” Regino said.
Policy reserves are forward-looking estimates of net future liabilities. These include benefit payments that will be disbursed to SSS members and their beneficiaries in the future.
“These future liabilities need to be recognized now as these provide us an accurate view of our long-term financial standing, which serves as our guide, as well as for the government in ensuring that we will be able to continuously serve our current and future members and their beneficiaries,” Regino said.
SSS is a state-run social insurance institution that extends social security protection to Filipino workers in the private and informal sectors.
Under the Social Security Act of 2018, it provides seven benefit programs including sickness, maternity, unemployment, retirement, disability, death, and funeral benefits, as well as loan privileges.
