After President Duterte approved an immediate P1,000 increase in the monthly pension of Social Security System (SSS) members, the battleground has shifted to the compensating measure of a 1.5 percent increase in members’ con-tributions as Senate Pre-sident Pro Tempore Franklin Drilon said it is “invalid and illegal.”
Drilon warned that the move could put SSS of-ficials in hot water as such action is con-trary to the law.
“The SSS is not allowed to raise the premium rates so it can increase benefits,” he said citing Section 4 of Republic Act No. 8282, which prohibits SSS to recommend increases in benefits that would require an increase in contribution.“While the executive’s decision to finally grant the long-awaited increase in the pension of SSS retirees is commendable, it should not be used to justify an increase in the premium payment,” Drilon said.
“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 stressed.
Section 4 (2) states that that SSS shall have the powers and duties “to provide for feasible increases in benefits every four (4) years, including the addition of new ones, under such rules and regulations as the Commission may adopt, subject to the approval of the President of the Philippines: Provided, That the actuarial soundness of the reserve fund shall be guaranteed: Provided, further, That such increases in benefits shall not require any increase in the rate of contribution.”
The senator, a lawyer and former justice secretary, explained that the SSS can only implement an increase in the benefits of its members, subject to the approval of the President, “if such increase is based on the actuarial soundness of the reserve fund” and as “such shall not require any increase in the rate contribution.”
SSS Chairman Amado Valdez disputed Drilon said the P1,000 increase in SSS pension 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,” he said.
SSS needs to justify hike
“They (SSS officials) should explain and justify that (increase in contributions) to the members,” Sen. Francis “Chiz” Escudero said.
The corresponding increase in members’ premium rates should be backed up by actuarial studies and should also prove that their investments and collection efficiency, which is very low, have improved and that the latter two are not enough to support the additional benefit, he added.
Drilon said that while the adjustment in the rate of contribution will take effect by May 2017, it is clear that such action is carried out in order to fund the pension increase.
“The President’s move to help our aging SSS pensioners is laudable, but the executive branch must also ensure that this pension hike will not be used as an excuse to enforce higher contributions from SSS members,” Drilon concluded.
Sen. Bam Aquino, a party mate of Drilon in the Liberal Party (LP), said he was surprised to learn of the increase in premium of 34 million members to fund the increase.
“Employers were surprised in the decision to raise the premium by 1.5 percent which might be small but if you sum it up, it will be a huge burden,” he said.
Rather than pursue the increase in premium of active members, Aquino urged SSS officials to improve its efficiency in the collection of monthly contributions of members.
Aquino also pointed out that when the pension increase was being deliberated in Congress, the adjustment in the rate of members’ premium was discussed an as option to raise the needed funds.
Senators Joel Villanueva and Sonny Angara, on the other hand, supported the steps taken by the Executive.
“That’s the sentiment of the Senate and that’s the reality. Someone has to pay for the additional benefits,” Villanueva said.
The newly-signed Executive Order providing for the increase by P1,000 in pension of retired SSS members, should further compel the agency to pursue its mandate of fiscal stability by ensuring efficient collection and more effective management of hard earned funds, Villanueva said.
“We are happy that our retirees will receive the additional pension and hopefully, the SSS management will be able to effectively manage the fund and improve their collection and that the increase in premium will be sufficient to make the fund sustainable,” he added.
Sen. Richard Gordon who led the Senate in passing the resolution on the SSS pension hike last Dec. stood amenable in having the second tranche of P1,000 in 2021 instead of the original plan which was supposed to be in 2019.
If only to ensure the continuous financial stability of the SSS, Gordon said he would welcome such decision which will be beneficial to 2.18 million pensioners especially in these times of great economic challenges.
“It is our duty in the Senate to provide laws that would improve our people’s lives though I don’t encourage the Senate to legislate for pension increases.
“However, we have to provide appropriate legislation to help the SSS become an even more outstanding manager of the fund so that it could expand its membership, invest maximize the use of its assets and invest the funds in projects that would ensure a healthy return on investments,” he said.
As chair of the Senate committee on government corporations and public enterprises, Gordon said he will continue to provide the necessary support to the SSS to ensure the extension of its lifespan.
“The Senate will provide the appropriate legislation necessary to strengthen the SSS and to assist it in preserving the sustainability and life of its funds that is considered ideal among other social security systems around the world,” he said.
Makabayan bloc to sue
The Makabayan bloc at the House whose members supported the increase in pensions for retired SSS members, said it is now planning to sue SSS for its planned increase in premium for its active members.
The group stressed that members should not be subsidizing the pension hike that was approved recently.
“We are not pleased by the reports that the increase in SSS contributions will fund the pension hike,” Bayan Muna party-list Rep. Carlos Zarate said in a press conference Wednesday at the House of Representatives (HoR) media center.
Zarate said that they wanted to see whether the increase in premiums was part of the resolution signed by President Rodrigo Duterte.
“We want to see the fine print of the document that the SSS board made the President sign,” said Zarate
Zarate noted that Section 4 of the Social Security Act of 1997 provides that an increase in benefits for SSS pensioners must not be subsidized by a concurrent increase in member premiums.
“They can say that it is not concurrent. The pension increase was made in January, while the contribution hike was enforced in May,” the Makabayan solon said.
“That is certainly a legal question that’s why we want to see the fine print of the board resolution.
Zarate said that in the event that the actions of the SSS board is in conflict with the Social Security Act of 1997 the Makabayan bloc would bring the issue before the Supreme Court.
At any rate, Zarate said that now isn’t the time for the SSS to collect increased premiums especially since it has a commitment to Congress to implement reforms.