House leaders are working on a compromise bill that would increase the pensions of the Social Security System’s 2.15 million retirees by P1,000 per month, or half of the P2,000 proposed increase that was vetoed by President Benigno Aquino Jr.
Speaker Feliciano Belmonte Jr., who used to head the Government Service Insurance System, said the emerging consensus among House leaders was to push for a more manageable P1,000 pension hike in order to ease the financial concerns of the SSS management and the pensioners.
Belmonte said the P1,000 increase would be double the P500 being offered by the SSS.
“The P500 is acceptable to the SSS board so we’re just asking them to make some adjustment and allow for a bigger hike of P1,000,” he said.
Belmonte said the House has passed House Bill No. 6112 which would allow the SSS board to increase the premium contributions of members to cope with the rising demands of pensions and other perks of members. “We’ve already passed it. We hope the Senate passes its own version,” he said.
Belmonte said that had the Senate approved its version of HB No. 6112, the President might not have been forced to veto the twin bills increasing the SSS pension to P2,000 per month.
However, Bayan Muna Rep. Neri Colmenares said his group would continue with their campaign among Congress members to override the President’s veto.
“They can study the P500 or P1,000 pension hike but this does not preclude us from pushing for the P2,000 pension hike,” said Colmenares, a candidate for senator.
Aquino right, says Osmeña
But Sen. Sergio Osmeña III said the President was right to veto the bill to protect the financial viability of the SSS.
Osmeña said Congress should have first ensured that there would be a source for the additional funds necessary for the increase.
He said it was irresponsible of Congress to require the spending of money without identifying a fund source, noting that it has been the habit of politicians who want to look good before voters to promise funds even if they do not know where this would be coming from.
“There should have been a fund-raising. On one hand, if you want to give away money, you have to raise money to balance it out,” he said in a radio interview.
For instance, it could have required a P100 hike in the contributions of some 31 million SSS members to have enough money for the pension increase, he said.
His veto may have been unpopular with disappointed SSS pensioners and their politician supporters, but President Aquino earned the praise of financial and business leaders.
The President’s veto of the measure reflected “responsibility over politics,” said Finance Secretary Cesar V. Purisima.
In a note to clients on Friday, American banking and financial services giant Citi said
Mr. Aquino had “averted fiscal risk” with his veto.
“We commend the President’s refusal to let electoral politics get in the way of our responsibility to the Filipino people. The proposed measure would have pushed the SSS into a fiscal cliff of insolvency,” Purisima said in a statement.
According to Purisima, had the President signed into law House Bill No. 5842, the SSS social security fund’s actuarial life would have been slashed and end in 2027 instead of 2042. The state-run pension fund’s unfunded liability would also double to P2.4 trillion, he added.
Survival of fund
“This is about the survival of the fund; had this bill passed, there wouldn’t even be any pensions to speak of in a little more than a decade,” Purisima said.
Mr. Aquino’s decision “was a choice between demanding better legislation for our people or dooming 31 million of our future retirees,” he said.
“The President, constrained by the judgment of history on one hand and the judgment of the headlines on the other, chose to put responsibility over politics,” Purisima said.
Citi Research’s Jun Trinidad described Mr. Aquino’s move as “fiscally prudential and seemingly unpopular.”
“Aquino’s veto of the proposed law hiking SSS’s pension pay was on the back of the higher cost of P56 billion annually that could wipe out SSS funds by 2029. Had he signed the law that did not require a hike in SSS member contributions, government would have paid for the SSS pension increase—likely a populist act by Congress during an election year,” Trinidad said.
“Aquino saved the government more than $1 billion annually in SSS pension payments that support near-term consumption for a limited few and eased material pressure on the fiscal deficit,” he said. With reports from Leila Salaverria and Nikko Dizon