LEGAZPI CITY, Jan. 16 (PNA) -- The Social Security System (SSS) has commended Malacañang’s support for preserving the pension fund’s long-term sustainability, following President Benigno S. Aquino III’s decision to veto House Bill 5842 which seeks an across-the-board SSS pension increase of PHP2,000.
In a statement emailed to the Philippines News Agency Saturday, SSS President and Chief Executive Officer Emilio S. De Quiros Jr. said the proposed increase would have consequences for both the 2.15 million current pensioners and 31 million members.
At least PHP56 billion would be needed to fund the additional PHP2,000 benefit for the 2.15 million pensioners annually.
“The PHP2,000 pension increase would lead to a projected deficit of PHP26 billion for 2016, from an expected income of PHP41 billion. As the number of pensioners grows, the initial PHP56 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 funds are projected to last until 2042 or 26 years from now.
De Quiros said it would be wiped out by 2029 or in 13 years, as presented to Congress in June 2015, due to recurring net losses caused by the PHP2,000 pension increase.
However, he said, given the low market sentiment and the need for SSS to divest PHP47 billion to PHP51 billion in financial assets to fund the increase in pension benefit, the fund life would be further reduced to 2027.
“The PHP2,000 increase and resulting shorter fund life will greatly affect our 33 million members and pensioners as well as their dependent spouses, minor children and other beneficiaries who are also mandated to receive their own share of SSS benefits,” De Quiros said.
In terms of absolute value, the state-run agency provides members a generous return of PHP6 to PHP15 in benefits for every peso they contribute to the SSS.
“SSS financial gains since 2010 to further improve the stability of the fund would be negated if the PHP2,000 pension increase was approved. It would be shortened to an alarming 11-year period from now,” the SSS top executive said.
The SSS fund life has been strengthened by various financial achievements over the past few years.
Annual net revenues, for example, averaged PHP33 billion from 2010 to 2014, much higher than the PHP8 billion average for 2000 to 2009; assets grew by 50 percent from PHP298 billion as of 2010 to PHP447 billion as of October 2015; and contributions collected by SSS per year were also more than enough to cover expenses for benefits and operations since 2012 with the annual investment income stored in the reserve fund.
More than 100 offices were also established since 2010 to bring SSS closer to members.(PNA) JBP/FGS/CBD/pjn