Social Security System projected to lose over P41 billion worth of contributions if the planned contribution increase is delayed, its official said Thursday.
According to SSS president and chief executive officer Aurora Ignacio estimated a loss of P41.37 billion in contributions in 2021 and a projected deficit of P14.90 billion.
Aside from the projected losses and deficits, SSS’s unfunded liability, which is now at P9.46 trillion, would also increase if the premium hike is deferred.
Ignacio expressed his worries as SSS opposed the proposals in the House of Representatives to delay or even totally stop the schedule contribution rate increase by amending Republic Act No. 11199.
President Rodrigo Duterte signed RA No. 11199, or the Social Security Act of 2018 in 2019 which allowed the Social Security Commission (SSC) — the SSS’s highest governing body — to increase contribution rate by 1 percentage point (ppt) every other year beginning 2019 until it reaches 15%.
SSS projects P41-B loss if premium hike is delayed
The agency is set to hike beginning in January 2021 its monthly contribution rate by one percentage point to 13 percent from the current 12 percent of their respective salaries, but not to exceed the prescribed maximum monthly salary credit (MSC).
Finance Secretary and SSC Chairman Carlos Dominguez pointed out that the restructuring of the contribution rate, along with the minimum and maximum MSCs and the other provisions of RA No. 11199, will “ensure the long-term viability of the SSS Fund, expand its coverage and provide more and higher benefits for its current and future members and their beneficiaries.”
According to Ignacio, the COVID-19 pandemic had caused a “considerable strain” in its liquidity because the agency implemented several measures to help its members survive the crisis.
“Postponing or stopping the implementation of the increase in member contributions will further exacerbate our already dire financial position,” she said in a House hearing.
Ignacio also noted that the additional monthly contributions are “relatively small,” and such a hike is a “long overdue reform which will serve to offset the financial impact of improved and expanded benefits that SSS has provided since 2017.”