The Social Security System (SSS) Fund may last only until 2026 if the second tranche of the P2,000 pension increase pushes through next year.
SSS President and Chief Executive Officer Emmanuel Dooc described the situation as “precarious,” a financial quandary with which, he said, the pension fund for private sector employees must not go through.
“Based on our actuarial studies, if we effect the increase in pension benefit by another one thousand to complete that two-thousand-peso commitment, our fund life will be further decreased to 2026, if the benefit will be given next year or 2019,” Dooc noted.
“With 2019 as base year, the fund life will be reduced to seven years,” he said.
The P1,000 increase would require the pension fund to generate an additional P2.5 billion a month or over P33 billion in additional payouts.
Prior to the implementation of the first tranche of the pension hike in January 2017, which gave beneficiaries an additional P1,000, the SSS Fund would have lasted until 2042.
After the pension increase was implemented, however, the fund’s life was shortened to 2032.
Despite of the looming financial crisis for the pension fund, Dooc assured pensioners that their addition pension increase will be delivered as promised.
“We will see to it that we are able to release the second tranche during the term of the President which can be up to 2022.”
SSS is now looking at the possibility of raising member’s monthly contributions by 1.5 to 3 percent and raise the minimum monthly salary credit from P1,000 to P4000 and the maximum salary credit from P16,000 to P20,000.
The adjustments could bring in additional funds estimated at P17 billion per quarter or P68 billion a year under a 1.5-percent increase in contributions or P136 billion a year if the contributions were raised by 3 percent.
SSS data showed the pension fund last implemented a 0.6 percent increase in contributions back in 2014.
But in the absence of such adjustments, Dooc noted the pension fund has seen contributions increase in past years—thanks to improved collection from members.
It was able to collect P156 billion in contributions last year, a 10.6 percent increase from P144 billion in 2016.
Including other benefits such as death, disability, maternity, sickness and funeral benefits the monthly disbursement is close to P16 billion, or nearly equivalent to the monthly contributions collected by the fund.
Dooc noted the target is to collect an additional 18 to 20 percent from members’ monthly contributions to keep the fund healthy.
“Mahalaga upang mapatatag natin ang ating fund life, ang fund ng system, mahalaga para sa kapanatagan ng loob ng kasalukuyang nag-co-contribute para pagdating ng panahon na sila naman ang mag pepension na, o may mangyari sa kanilang contingency, may aasahan sila o ang kanilang mga beneficiaries, he said. —VDS, GMA News