by Jan Michael Carpo, Reporter
The Social Security System (SSS) announced earlier this week that the rise in contribution rates since 2019 has helped extend the fund’s life by another 22 years.
The contribution rate hikes were instrumental in extending the fund’s life until 2044.
In a press statement, Michael G. Regino, President and CEO of SSS, noted that the state-owned pension fund’s life would have lasted only until 2032 after adding the additional P1,000 (or $18.10 at the current currency rate) pension payout in 2017.
“However, with the help of gradual contribution rate increases mandated by Republic Act (RA) No. 11199 or the Social Security Act of 2018, the fund life was extended by another 12 years or until 2044,” the press statement read.
RA No. 11199 was enacted to help rationalize and expand the powers and duties of the Social Security Commission and thus, ensure the long-term viability of the Social Security System.
Fund’s life to get an additional 10-year boost
The latest SSS actuarial valuation has shown that the fund life may still be boosted further by another 10 years, a development which Regino credits to the SSS’ ongoing efforts in boosting its memberships and coverages.
So, from 2044, the fund’s life could still be extended until 2054.
In light of this, the SSS will now begin implementing the third phase of its four-tier contribution increase beginning on January 1, 2023.
The current SSS contribution rate of 13 per cent would increase by one percentage point to 14 per cent, with the employer bearing the cost of the increase.
The employee’s share of the contribution would remain at 4.5 per cent, while the employer’s share would rise to 9.5 per cent from the present 8.5 per cent.
In order to fulfil its goal of providing social security protection to its stakeholders, which should span generations, Regino added that the SSS will still try to extend the fund’s life further.
“It is important for us to implement the contribution rate increase together with other social reforms so we could achieve this goal and ensure that we have sufficient funds to provide for short- and long-term benefits, including the immediate financial needs of our members and pensioners, especially in times of contingencies,” Regino added.
According to the SSS, because of the additional 22 years in total that had been added to the fund’s life, members and pensioners will now be able to enjoy their benefits until 2034.