SSS: Vetoing P2,000 pension hike the right thing to do

MANILA, Philippines - A P2,000 increase in pension of Social Security System (SSS) retirees would have required existing ones to pay additional 4.8 percent of their monthly salaries to sustain the fund or risk being wiped out by 2029.

In its first comment following the presidential veto last Thursday, the SSS management hailed President Aquino for "saving" the institution from bankruptcy when the latter returned House Bill 5842 to Congress without his approval.

The bill would have mandated a P2,000 across-the-board hike in SSS pensions of 2.15 million retired members and their dependents.

"Unpopular as the veto decision may be, it was the right thing to do," said Michael Victor Alimurung, SSS commission representative for the general public.

"It shows that the president is principled enough to withstand pressure, by refusing to support a bill that he knows will lead to the financial ruin of the SSS," he said in a statement on Friday.

At current level, SSS funds are ample until 2049, or 26 years from now. This could have been shortened to an "alarming" 11 years or 2029 if the hike was pursued without a commensurate contribution hike.

Based on SSS computations, contributions by its 31 million members would have to be increased to 15.8 percent from the current 11 percent to fund the pension hike without trimming the life years of the fund.

Currently, SSS contributions of employed individuals are shared by the employer and employee. The former pays 7.37 percent, while the latter shoulders 3.63 percent.

Another method would have been to let the government subsidize SSS once its funds got usurped. SSS president and chief executive officer Emilio de Quiros Jr. said this could easily cost P130 billion a year.

"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.

The SSS chief said this would be tantamount to reversing back the institution's financial gains since the Aquino administration took over in 2010.

In a text message, Budget Secretary Florencio Abad agreed. "The main issue there is the viability of the pension system. It's now back in health. So why put it in the red again?"

According to SSS data, average net revenues have more than tripled to P33 billion from P8 billion during the first four years of Aquino. 

Total assets, meanwhile, grew by half to P447 billion as of October last year from P298 billion in 2010. SSS said annual contributions since 2012 have been "more than enough" to cover for its operations and benefit payouts.

"With Malacañang's decision, we continue to further strengthen he SSS to become sustainable and viable," Alimurung said.

De Quiros, for his part, said currently, the SSS already provides a "generous return" of P6 to P15 in benefits for every peso they contribute to the fund.

"The SSS will continue with its mission to implement measures that would truly redound to the financial stability of the institution, extend meaningful benefits and maintain the trust and confidence of the present and future stakeholders," he said.