State insurance fund premiums for private sector up by 0.2%

The Employees Compensation Commission recently raised the State Insurance Fund premiums to a maximum of 0.2 percent for each worker in private firms receiving not less than P15,000 monthly salary. However, for employees receiving less than P15,000 SIF contributions will remain at P10 per month. SIF supports the Employees Compensation Program implemented by ECC that provides a package of benefits for public and private sector employees and their dependents in the event of work-connected contingencies such as sickness, injury, disability or death.

The funds are generated from the employers' contributions collected by the Government Service Insurance System for the public sector, and the Social Security System for the private sector.

Labor Secretary Arturo Brion said that in a resolution, the ECC Board said that the new rate of SIF contributions of private sector employers will take effect in January 2007.

Brion who sits as chairman of the ECC Board, said that the new ECC resolution amended the previous rule which fixed the private sector employers' SIF contributions at P10 per month per employee regardless of the amount of the employee's monthly salary. The old rule has been prevailing for the past 31 years.

He explained that the present rate of P10 per month per employee would only apply to low-salaried workers in private firms earning P14,500 monthly salary and below. He said that the ECC opted to maintain the present rate of SIF premiums for low-salaried workers so as not to unduly burden employers especially those in small and medium scale enterprises.

According to him, the new rate of private sector employers' contributions to the SIF would be made effective next year to preserve the integrity and viability of the SSS-managed SIF and prevent it from being depleted.

DOLE cited ECC records which show that settlement of EC claims with SSS has exceeded employers' contributions and interest earnings amid the increases of the government's contributions to the SIF. The public sector has raised its SIF contributions twice for each employee per month from P10 to P30 to P100 in 1979 and 2001, respectively. From 1975 to 2005, both GSIS and SSS paid a total of P24.56 million EC claims to 3.22 million workers and their dependents. The two agencies, however, collected only a total of P22.32 million SIF contributions during the 30-year period.

An actuarial study of the SSS revealed that if the trend in the rising number of claims and pensions continued, the SIF would be exhausted by 2026. At present, the SIF managed by SSS has reserves amounting to P22 billion. - Wenna A. Berondo/MEEV