A branch office of the SSS. (File photo by GRIG C. MONTEGRANDE / Philippine Daily Inquirer)
MANILA, Philippines — The Social Security System’s (SSS) net loss almost doubled to P843.9 billion in 2021, but it was mainly due to the provision of reserves for future liabilities and the state-run pension fund for private-sector workers remains financially viable, according to SSS president and chief executive Michael Regino.
“We assure our stakeholders that this does not affect our current cash flows and we remain financially viable in terms of providing benefits to our members,” Regino said.
He explained that the SSS and other government financial institutions adopted new accounting guidelines in line with best practices accepted by the International Accounting Standards Board.
Thus, Regino explained, the pension fund reported net losses over the past two years.
“The SSS’s adoption of the [Philippine Financial Reporting Standards 4], which recognizes social benefit liabilities and the margin for adverse deviation, resulted in an increase in policy reserves that contributed to the accounting net loss of nearly P844 billion for 2021.
‘Simply estimates’
“We want to clarify that the increase in policy reserves is not actual cash that went out of the fund in 2021. These are simply estimates of the required reserves to fund future benefit claims,” Regino said.
“We recognize these future liabilities as early as now to be more transparent in managing the SSS fund and to create a clearer view of our long-term financial standing,” he added.
The SSS’s audited statements of comprehensive income released on Friday were the same as the unaudited statement reported by the Inquirer in May. Last year’s net loss ballooned by 99 percent from P424.4 billion in 2020.
The SSS increased its total income to P276.3 billion last year from 2020’s P257.2 billion, but the fund’s total income was smaller than 2021’s P1.12-trillion total expenses, almost two-thirds larger than the P681.6 billion in 2020.
The jump in total expenses was mostly due to the change in policy reserves, climbing to P872.4 billion in 2021 from 2020’s P461.7 billion.
“In its 2021 unaudited financial statement, the SSS’s cash inflows of P262 billion surpassed its cash outflows of P234 billion. In the last six years, the SSS recorded cumulative earnings of P202 billion, even with a record-breaking P1.1-trillion benefit payments and P254-billion loan releases to its members and pensioners.” Regino noted.
This meant the SSS can still disburse payouts for its members and pensioners given unaffected cash flow and funding.
Regino said the SSS’s fund life won’t be depleted until 2054, similar to Thailand’s, and longer than the United States’ (up to 2034) as well as Vietnam’s (until 2027).
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