Diokno: SSS pension hike after tax reform law
Any increase in Social Security System (SSS) pension should come only after the approval of the tax reform law that would make it easier to increase members’ contribution to the fund, Budget Secretary Benjamin Diokno said on Tuesday.
Diokno said President Duterte was not in the same situation as when he was a candidate who had promised voters an increase in the pensions of retirees in the private sector.
As Chief Executive, Mr. Duterte now has access to more data concerning the SSS, Diokno said following reports that the President was still looking for ways to give the pension increase while protecting the life of the fund.
Before his inauguration, Mr. Duterte had said he wanted to increase the pensions of retired SSS members.
“Candidate Duterte is different from President Duterte and you see that all over, even worldwide. Candidate Trump is different from President Trump. There are promises you make that turn out can’t be fulfilled when you look at the data. That’s where I’m coming from,” Diokno said at a press briefing in Malacañang.
Memo to President
The SSS has submitted a memorandum to the President seeking approval of a P1,000 pension increase starting this year, and another P1,000 increase in 2022.
SSS Chair Amado Valdez said the board’s proposed pension hike would be sustained by internally generated funds. Valdez said the SSS had also proposed a 1.5-percent increase in the current contributions of members to ensure that the fund would not be depleted in case of a pension hike.
Congress, for its part, has approved a resolution calling for a P2,000 increase in SSS pensions, with the first installment of P1,000 starting this month followed by the remaining P1,000 in January 2019.
Valdez said the pension increase sought by Congress was separate from the SSS board’s proposal for a pension hike, which only needs the Presidents’s approval to be put into effect.
The finance, budget and socioeconomic planning secretaries last month warned that without an increase in members’ and employers’ contributions, the P2,000 increase would cut the actuarial life of the pension fund by 14 to 17 years.
They said the SSS would have to shell out an additional P32 billion annually to cover the initial P1,000 increase and P62 billion for the entire P2,000 increase in monthly payments.
There are more than 33 million SSS members, including 2.2 million retirees receiving pensions.
More feasible
Diokno recommended that any increase in SSS pension should come after tax reform, when it would be more feasible to increase members’ contribution to the fund.
The proposed tax reform measures are expected to modify the income tax brackets so that salaried workers would be able to take home more of their pay.
With the new law, the SSS would be in a better position to ask for an increase in the members’ contribution in order to fund any pension hike, he said.
“In the tax reform, you get more money in your pockets and therefore you are now in a position to contribute a small amount for the pension of those who are already receiving pension, so that’s our solution,” he said.
SSS officials should be the ones to look for ways to fund the pension increase, not the President, according to Diokno.
