SSS president and chief executive officer Aurora Ignacio. Screengrab from House of Representatives streaming.
MANILA, Philippines — Deferring the scheduled hike in contribution of members of Social Security System (SSS) will “bring more difficult times” for the agency, SSS president and chief executive officer Aurora Ignacio said Monday.
During the online meeting of the House committee on public accounts, Ignacio reiterated their opposition towards the bid to defer the scheduled increase in contribution rate amid the coronavirus pandemic, citing studies that by the year 2045, expenses incurred would far outweigh SSS contributions.
“The position of the SSS is not to conform to the requested or the proposed deferment simply because it is going to be a threat to the solvency of the unfunded liabilities of SSS,” Ignacio said.
“This will, more or less, weaken the position of SSS rather than strengthening the fund for the members. At the outset, it will bring more difficult times for SSS as regards the threatened solvency on the unfunded liabilities,” she added.
According to Ignacio, “the long-term solvency is threatened with trillions in unfunded liability.”
“In simple terms, there is insufficiency to enable us to support the system for the next generation of pensioners,” Ignacio said.
SSS projects by the year 2045, the net revenue—or the contributions and the income—will be less than the benefits and the expenses, she added.
“So, in short, the fund will become negative to cover the benefits and the expenses given the age of the contributing members and the increase in the retirement age of our pensioners,” Ignacio said.
The SSS official pointed out several factors that contribute to this situation such as the aging population and the decreasing fertility rates.
“In 1980, there were about nine workers to one pensioner ratio. In year 2020, there are about six workers to 1 pensioner in ratio and in 2050, because of the aging population and decreasing fertility rates, there will be three is to one pensioner,” Ignacio said.
Ignacio earlier disclosed that SSS stands to lose over P41 billion worth of contributions if the scheduled increase in contribution rate is shelved.
The Social Security Act of 2018 allowed the Social Security Commission, the highest governing body of the SSS, to increase the contribution rate by 1 percent every other year starting 2019 until 2025.
From 11 percent in 2018, the contribution rate was raised to 12 percent in 2019.
It should have been raised to 13 percent in January 2021 in accordance with the law. However, lawmakers pushed for the deferment of the SSS contribution increase for 2021 to cushion the impact of the coronavirus pandemic.
The House of Representatives has earlier approved the measure granting the President the power to suspend the hike in the SSS contribution rate while its counterpart bill remains pending in the Senate.