I don’t believe the BS that the Social Security System would go bankrupt in 10 years if it didn’t pay the P2,000 additional monthly pension being sought by a bill awaiting signature by President Duterte.
The SSS is one of the largest, most liquid, most profitable and one of the best-run companies in the Philippines. Its annual revenues of P162 billion rank SSS as the ninth largest company in the Philippines. In terms of profits, SSS is the No. 1 company in the country.
Only San Miguel Corp. (P678 billion), Top Frontier Investment Holdings (677.76 billion), Petron Corp.,(P361 billion), SM Investments Corp. (P296 billion), Manila Electric Co.(P258 billion), JG Summit Holdings (P231 billion), Ayala Corp.(207 billion) and PLDT (P171 billion) make more revenues. These figures are culled from BizNewsAsia’s list of 1000 largest corporations for 2015 out this week. In terms of profits, no other company makes more. Only SSS.
SMC, Petron, SM, Meralco, JG Summit, Ayala and PLDT have to deliver a good product or a good service and do excellent marketing to generate their revenues and profits. They hassle for every peso of revenue and profit.
SSS does not need to do these fancy things to generate income. In fact, SSS can render such a really bad service and still grow its revenues year after year. Why? Because SSS makes money from the compulsory contributions of its members—numbering 34 million. If SSS members don’t pay their premium they are penalized—through denial of benefits and even a lawsuit.
SMC does not punish you if you don’t buy its beer, its chicken, its petrol, its electricity, or patronize its tollways. Same with SM, Ayala, JG Summit, and PLDT. These companies are forced to offer excellent product or service to generate revenue or make it profit. They live in a competitive world.
Not SSS. It has a monopoly business. And it is a bad monopoly. You can appoint a dog or a rat as president and CEO of SSS and the system still will make a lot of money. Why? Because you, members, are required by law to contribute to it. And the worse its service, the more SSS makes money. That’s why for SSS, making money is a no-brainer. That’s why anyone appointed president or CEO invariably end up being a corporate genius. Managing SSS is like a picnic or a walk in the park. In fact, its managers don’t bother to walk in the park. They simply smile all the way to the bank.
According to former Rep. Neri Colmenares, SSS currently collects only 24 percent of its potential revenues. This implies that if SSS were a little more efficient, it could easily double, triple or even quadruple its potential revenues. SSS could make P500 billion in annual revenues, ranking it behind only money powerhouse San Miguel.
Note that SSS has 34-million members. Of that, 20 million are not paying premiums or are inactive. Could you imagine the extra SSS income if those people were located by SSS?
Comes now our populist President Duterte breaking a campaign promise to grant pensioners’ P2,000 a month pension increase. The tough- guy chief executive’s so-called economic managers have scared him out of his wits that SSS would go bankrupt if he made good on his promise.
Economists by nature can be heartless analysts. They are not affected by emotions. They cannot assign numbers to such abstract concepts as social justice. But politicians like Duterte are very good at perceiving what is social justice. Digong is a socialist. He also likes to render quick justice. Look at the some 6,000 killed in his anti-drugs war. They are all in the name of having a good society.
Come on, Pareng Digong. Nothing can be further from truth that SSS would be bankrupt in eight to 10 years with the simple grant of P2,000 a month pension increase. SSS is not that weak an institution. Simple math will solve your problem, Mr. President.
I finished college and I am not an SSS pensioner (SSS does not recognize me as a member), so I can do the SSS math with some objectivity.
According to SSS data, its granting the P2,000 pension increase per month would mean P64 billion a year additional drain on its income (doubt those figures). P64B divided by 12 is P5.33 billion a month.
SSS makes a P40.695 billion in profits a year (2015 data). That’s P3.39 billion net income a month. Not even the largest of our banks or the largest of private companies make that much money. Deduct P3.39 billion from the additional expenditure of P5.33 billion a month (to meet the P2K a month pension increase), the SSS income deficit would be P1.998 billion a month or P23.976 billion a year.
SSS has a reserve fund of P470 billion (October 2016 data). That’s cold cash. Divide 470B by 23.976B. You get 19.6. That’s the number of years SSS would use up its cash reserve fund if it charged the pension deficit of P23.976 billion a year—assuming SSS did nothing else to increase its revenue and its profit. Could it happen that SSS could improve its reserve fund in the next 20 years? No. D ba?
As I have said, SSS managers are geniuses. They are also backed up by a law that penalizes non-payment of SSS contributions.
By the way, did you know what is SSS’s product or service? It is not collecting contributions. It is not making money from its investments.
It is social justice. Social justice is the cornerstone of a stable society. Sans social justice, you have a revolution. I am not suggesting that the 2.2-million pensioners storm the SSS barricades, although that may not be a bad idea.