State-run Social Security System said it is open to a pension increase if the government and members will agree to a funding mechanism that will offset projected revenue losses.
SSS president Conrado De Quiros Jr. told reporters the new administration would look at the whole financial situation of the pension fund, before mandating a possible P2,000 across-the-board pension hike, which was vetoed by former President Benigno Aquino III in January this year.
“I think they [Duterte administration] are willing to look at the whole financial situation and what funding mechanism they can come up with,” De Quiros told reporters at the sidelines of the 66th founding anniversary of the Philippine Life Insurance Association in Makati City Tuesday.
“What we’re saying is you need to have a funding mechanism, otherwise you shorten the life of the fund. Whatever is the funding mechanism because based on our estimate that’s P56 billion. and that’s a big amount, growing [every year],” De Quiros said.
Aquino decided to veto House Bill 5842 at the start of this year, as the proposal pushed for an across-the-board monthly SSS pension increase of P2,000.
De Quiros previously said the proposed increase would have consequences for both the 2.15 million pensioners and 31 million members. He said at least P56 billion would be needed to fund the additional P2,000 benefit increase for the 2.15 million pensioners annually.
“As the number of pensioners grows, the initial P56 billion in additional benefit outlay per year would increase, which in turn contributes to the rising annual deficit or net loss incurred by SSS,” De Quiros said earlier.
The SSS fund would be wiped out by 2029 or in 13 years due to recurring net losses caused by the proposed P2,000 pension increase, the fund manager said.
“If you want a situation where the fund can guarantee every member pension, it should be about 70 years but right now you’re doing, from 2016 up to 2042,” De Quiros said.
He said “you need to increase contribution on a gradual basis” to guarantee the pension of every member.
SSS said to implement the P2,000 pension increase and still maintain the present fund life of 26 years, the contribution rate needed should be increased from the present 11 percent to 15.8 percent of members’ income.
SSS said in the absence of a contribution rate increase, the government would have to provide a minimum annual subsidy of P130 billion per year starting 2030, or once the SSS investment reserve was exhausted.
Finance Secretary Carlos Dominguez III said last week he would review the possible pension hike for the members of the fund. “We’ll see what they file. I haven’t seen it. We’ll read first what they have to say. You know this is a technical issue. It’s not legislation. You need an actuary to look at all of this,” Dominguez said.
SSS revenues reached P162.1 billion last year, up 4.5 percent from P155.2 billion in 2014. Members’ contributions rose to P132.6 billion from P120.7 billion in the previous year.