Members of Social Security System (SSS) will have to pay higher contributions next year as the higher monthly rate of 11 percent from 10.4 percent starts January 2014, officials announced in a press briefing Tuesday.
Those earning a monthly salary of P10,000 will have to pay monthly contribution of P1,100.
For employed members, employers will shoulder 7.37 percent of the SS contribution while the employee will pay the 3.63 percent. Self-employed and voluntary members will shoulder the entire 11 percent contribution rate.
The state-run pension fund has been pushing for a higher contribution rate since 2011, president and CEO Emilio S. de Quiros Jr. told reporters.
"The increase in contribution rate is to correct unfunded liability, and this will reduce the unfunded liability by P166 billion or 15 percent," he said.
"We're not incurring losses. We've been generating income than the past administrations," De Quiros said.
As of December 2011, the unfunded liability of SSS was at P1.07 trillion, which increases by about 8 percent a year.
The SSS chief said the higher contribution rate will allow the pension fund to extend the Social Security Fund or SSF by four more years from 2039 to 2043.
SSF is the total contribution of private sector employees currently held by SSS.
"We've been doing a lot of consultations with both employer groups and unions, also with ECOP (Employers Confederation of the Philippines) and TUCP (Trade Union Congress of the Philippines)," De Quiros noted.
A recent analysis of pension funds in Asia by many organizations including the Asian Development Bank sowed the Philippines has an imbalance between the amount of contribution and the amount of benefits.
"For every P1 contribution, P6 is generated in terms of benefits. It will come to a point SSS will not be able to provide benefits due to the gap between P1 and P6," De Quiros said.
"Our estimate is that if we want to attain international standard of 70 years or perpetuity, we need to increase the contribution rate to 14 percent," he added.
At the same briefing, officials announced that the monthly salary credit ceiling will be raised to P16,000 from P15,000 effective January 2014 as well.
The ceiling is the basis for the benefits of SSS members like pension, and sickness and maternity allowances.
"The new maximum monthly salary credit means that a greater portion of the members' incomes are covered in their SSS contributions. Higher contributions eventually mean higher benefits in the future," De Quiros noted.
In his fourth State of the Nation Address (SONA) last July, President Benigno Aquino III called for an increase in contributions of SSS members by 0.6 percent which will help cut liabilities of the state-run pension fund. –
BM/VS, GMA News