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Jan 11, 2012
SSS eyeing hike in contributions this year
January 10, 2012
STATE-RUN Social Security System (SSS) is eyeing to get Malacañang’s approval for its proposed contribution hike within the first half of the year.
Emilio de Quiros Jr., SSS president and chief executive officer, told reporters on Monday that an increase in contribution of the employee’s monthly salary to 11 percent from 10.4 percent would likely take place within the first semester.
“The entire SSS board is pushing for it [increase in contribution]. We are now more optimistic to get the employers’ approval to raise the contribution rate,” de Quiros said.
He added that SSS is raising the contribution rate by 0.6 percent to 11 percent of the monthly salary, to be equally shared by employers and workers.
The planned hike in the contribution had earlier been pushed back to next year as employers’ lobbied for its suspension amid calls for wage increase last year.
“There are no more obstacles like a looming wage hike, and thus we are now closely coordinating with the employers and workers’ groups to finalize the matter,” the pension fund’s top official said.
De Quiros said that employers are now more receptive on the pension fund’s proposal.
“Then we would submit our proposal to Malacanang. Once we get the President’s nod, we would implement the new rate within the first half of the year, hopefully,” he added referring to President Benigno Aquino 3rd.
The SSS expects that the 0.6 percent increase in contribution would add seven years to its fund life and would enable SSS to provide better benefits.
The move would likewise extend the benefits and pension to its members from 2039 to 2049.
Under the 2007 actuarial valuation, the pension fund’s life is seen to last until 2039.
“We need to increase the rate of contributions so we can also improve the package of benefits to the members,” de Quiros said.
“Raising the contribution rate lengthens the life of SSS. Its actuarial life has gone up to 2039 but ideally, the pension fund’s actuarial life must be 70 years,” he added.
The SSS operates on the principle of forced savings and cross-subsidy to enable workers to accumulate savings for retirement.
At present, the SSS contribution rate of 10.4 percent of the monthly salary is less than half the 21 percent in the public sector under the Government Service Insurance System. The average contribution rate among Asian countries is 23 percent and among European countries, 35 percent.
The last increase in the contribution rate by a percent was made in 2007.
Besides the contribution hike, de Quiros said that they would also raise the monthly salary credit ceiling from P15,000 to P20,000.
From the present P15,000 monthly salary credit cap, the ceiling would be raised to P20,000 to allow employees with bigger salaries to save up for retirement through higher contributions. –KATRINA MENNEN A. VALDEZ REPORTER, Manila Times