SSS launches new investment trust

MANILA, Philippines — While the Social Security System (SSS) has rejected appeals to postpone the collection of another increase in premium contributions, the pension fund is set to launch a new investment trust along with the hike in January.

“As much as the SSS would like to support the clamor of the public that the intended increase be deferred, actually, we are not going to do that because the basis for such increase is a legislative act,” SSS senior vice president and chief lawyer Voltaire Agas said on Wednesday. He was referring to Republic Act No. 11199, or the Social Security Act of 2018 signed by President Duterte in 2019, that allowed the Social Security Commission (SSC)—the SSS’s governing body—to increase the contribution rate by 1 percentage point in 2019, 2021 and 2025.

Not funded

“As we all know, in 2017, we had a P1,000 across the board pension benefit increase for our pensioners, and that benefit adjustment or increase was not funded. So it will put at risk the sustainability of the fund,” Agas said.

SSS president and chief executive Aurora Ignacio said in the same press briefing that the SSS understood the plight of pensioners, but the pension fund needs to maintain its actuarial soundness so it could continue to give benefits in the future. Edgar Cruz, the pension fund’s chief actuary, said that the SSS fund life was projected to be 2054 at the last valuation and it may even be cut to 2044 if another pension increase is granted.

“The fund is expected to be depleted and we have to think of ways to extend to perpetuity,” Cruz said.

Finance Secretary Carlos Dominguez III, who chairs the SSC, also blamed the 2017 pension increase for the fund’s financial woes.

“Any drop in collections may lead to cash flow and liquidity issues. This could endanger the SSS’ ability to provide its members and their beneficiaries with benefits and loan privileges,” Dominguez warned.

New benefits

The SSS officials said one of the new benefits was the Workers’ Investments and Savings Program (WISP), to be rolled out by January 2021, that will entitle members to retirement, total disability and death benefits in addition to the regular SSS benefits.

Under WISP, the SSS will invest part of the increased contributions in risk-free government securities and a modest portion will be invested in equities in blue-chip corporate investments.

Earnings realized from investments will be distributed proportionately based on members’ contributions, with the tax-free base return of investments of 4.5 percent.

The basis of a member’s benefits will be their total accumulated account value at the time of claim approval, explained Joy Villacorta, SSS vice president for benefits administration.

“It’s another layer, it’s our second layer of protection … Additional benefits to supplement your pension benefits,” Villacorta said.

“The intent at the end, this will support retirement but also for final contingencies like total disability and death, this will also be used,” she said of the program.

Assurances

Dominguez assured members that their investments would be well-managed and would allow the pension fund to respond to the needs of members despite the drop in collections during the pandemic. As the SSS had delayed collections of a dwindling number of members’ contribution payments amid prolonged COVID-19 quarantine while lending more to those badly hit by the pandemic-induced recession, the pension fund shed revenues and saw its net income drop 8 percent to P28.6 billion as of end-September, the Inquirer reported earlier.

“The SSS expects to further improve its financial performance and have better collections in the years ahead as the economy recovers from the coronavirus pandemic and regains its pre-COVID growth momentum,” Dominguez assured SSS members and pensioners. INQ