Budget Secretary Benjamin Diokno insisted yesterday the more than 30 million members of the Social Security System (SSS) should be required to pay a higher premium before the fund gives out additional pension.
He made the proposal as part of the three-member team advising President Duterte on economic issues, he said in an interview with GMA-7.
The two other team members are Finance Secretary Carlos Dominguez III and Economic Planning Secretary Ernesto Pernia.
Diokno admitted that the group blocked the proposal to increase the monthly pension of more than two million SSS pensioners by P2,000 without increasing members’ premium contribution.
“It should not have reached the President’s desk in the first place. The SSS board of trustees should have exercised leadership and resolved the issue,” he said.
When reminded that Duterte had promised the pension hike before he became president, Diokno said: “Well, I am not a politician, but … the candidate Duterte is different from President Duterte.”
“You see that all over, even worldwide, candidate Trump versus President Trump. You have promised something but when you see the data, you will realize that it is not doable,” he added.
In his proposal, he said the increase in premium contribution should come after the planned reduction in income tax.
If income tax rates were cut, he said workers would have more money and they wouldn’t mind paying a small amount of additional SSS contribution.
The SSS could then increase pension, he added.
The proposal to reduce income tax got stuck in the House of Representatives. Before 2016 ended, the committee on ways and means chaired by Quirino Rep. Dakila Cua gave priority to a bill changing the system of taxation on cigarettes.
While Diokno said the proposal would result in a bigger take-home pay for workers, what he did not say is that the administration’s economic team is also proposing that more taxes be levied on oil products, including bunker oil for electricity generation, and cooking gas.
The additional taxes would result in higher prices of goods and services and increased transportation cost, according to lawmakers opposed to the recommended higher levies.
In fact, they would offset, if not exceed, whatever gain workers would receive from the planned income tax cut, they said.
In his television interview, Diokno also opposed the suggestion of some lawmakers that the government subsidize the SSS so it could afford to pay the P2,000 monthly pension increase.
“This is a private pension fund. Taxpayers should not be made to subsidize it. It should operate on its own,” he said.
He said even during the time of the late president Ferdinand Marcos, the government did not infuse funds into the SSS.
“Marcos did not touch it, did not intervene. He let the trustees run the affairs of the pension system and manage its funds,” he said.
Diokno stressed it’s the President who would ultimately decide on the issue.
“I mean I’m just doing my job. If he decides otherwise, I have done my job, right?” the budget chief said.
Last month, SSS chair Amado Valdez said a joint resolution on the proposed pension increase may be signed by the President before the end of 2016.
P1K will do
For two senators, the SSS would be able to implement at least a P1,000 increase in the monthly pension of its members instead of the original proposal of P2,000.
Sen. Sherwin Gatchalian said that what is needed is for the government to pressure the SSS to reduce its operating expenses, which would clear up funds for a P1,000 hike in the monthly pension of retirees.
“Instead of depriving the SSS pensioners an additional P1,000 per month, the government should pressure SSS to reduce its operating expenses,” Gatchalian said.
He cited the fat bonuses granted to top executives of the pension fund, “at the expense of the members and without clear performance targets” as among the expenses that could stand some adjustments.
Senate Majority Leader Vicente Sotto III said he believes it is the executives of the SSS who are against the pension hike, which was why they were passing the buck to the President.
“They can do it if it is only P1,000. They don’t want it so they are passing it to the President so that this would be delayed,” said Sotto, adding he believed Duterte would grant a P1,000 pension hike.
Sotto was among the several senators who filed bills seeking to increase the pension of SSS members.
According to Sotto, his proposal would provide for a minimum monthly pension of P3,000 from the current P2,400 for SSS members with at least 20 credited years of service.
For members with at least 10 credited years of service, Sotto is proposing to increase their minimum monthly pension from P1,200 to P2,000.
“Therefore, all of those who are getting more than P3,000 in pension would not be included. Only the small (pensioners) would benefit from this,” Sotto said.
Sen. Juan Edgardo Angara said that any plan to increase the monthly pension should be carefully studied because of its impact on the life of the pension fund.
“In my comment in the plenary when the resolution was taken up, I noted that increases would shorten the life span of said reserves by at least a decade. This has to be considered because we may be mortgaging the next generations’ future with a hike that doesn’t take this into account. Any hike has to be forward looking as well,” he said.
Senate President Aquilino Pimentel III also called for prudence in making any decision.
“We should always be cautious and be extra careful in spending money raised or collected under mandate of the law (like taxes and SSS premiums). Hence if President Duterte needs time to study the matter then let us give him the study time he needs,” Pimentel said. – With Marvin Sy