Contribution hike not illegal - SSS
The online news portal of TV5
MANILA, Philippines -- (UPDATE - 11:13 a.m.) The Social Security System refuted on Thursday Senate President Pro Tempore Franklin Drilon’s claim that the planned hike in its members’ contributions to fund the approved P1,000 pension hike would be “contrary to law.”
At the same time, SSS chairman Amado Valdez explained that the pension increase, which will become effective this month, “will be financed by current contributions and investment income.”
“The additional contribution hike by May 2017 will be used to enlarge the Investment Reserve Fund, to generate higher yields for investments, and to further strengthen the viability of the pension fund for future obligations,” the statement said.
On Wednesday, Drilon, while hailing President Rodrigo Duterte for approving the pension increase, said the “SSS is not allowed to raise the premium rates for the purpose of making up for increased benefits."
Citing Section 4 of Republic Act No. 8282, he said the law prohibits SSS from recommending an increase in benefits that would require an increase in contribution.
"The increase in benefits of our pensioners must not come from a similar increase in the burden shouldered by current SSS contributors. The law is crystal clear in that regard," he said.
Activist groups also slammed the planned increase in SSS premiums to fund the pension increase.
The urban poor group Kalipunan ng Damayang Mahihirap or Kadamay called it a “deceptive way to gain public trust” and maintained that “it is possible to give an unconditional increase in the pension of senior citizens … without increasing the monthly contributions as well.”
Valdez stressed that “the SSS is mandated to promote social justice by providing meaningful benefits to its members when they retire.”
But Quezon City Representative Winston Castelo, while not totally writing off an increase in SSS members’ contributions, said this “should be made contingent on the investment performance” of the pension fund “to force its management to invest wisely and manage its investments well.”
“As of September 2016, SSS has more than PhP470 billion in investments from which it generated income of only PhP24.6 billion -- for just about five percent ROI,” Castelo said, describing this as “very inefficient investing.”
“The fact is, SSS appears to earn more from lending to its own members,” he said. “It charges its members 10 percent for salary loans plus 1 percent service fee for a total of 11 percent. Housing loans are charged eight 8 to 11 percent depending on amount. If the average ROI of SSS is 7 percent as it claims, that means SSS is earning lower from its other investments -- higher from lending to its members.”
To correct this, he said, “let's require that any increase in contribution should take effect only if SSS achieves an annual average ROI of, say, 8 or 10 percent.”
At the same time, Castelo also suggested that “instead of increasing the rate of contribution from 11 percent to 12.5 percent, the government should just increase the maximum salary cap from the present P16,000 to P25,000,” which he said “should be enough to cover the projected financial requirement of the pension increase without burdening low-income earners and self-paying members.” (with a report from Lira Dalangin-Fernandez, InterAksyon.com)