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President Duterte relaxes while waiting to accept the credentials of new ambassadors at the study
room of Malacañang yesterday.By Christina Mendez and Janvic Mateo via Philstar
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MANILA, Philippines – Beginning this month, retired members of the Social Security System (SSS) will have P1,000 more in monthly pension.
Malacañang announced yesterday President Duterte’s approval of the P1,000 hike, but with a corresponding 1.5 percent increase in members’ contribution.
With the pension increase to benefit about two million pensioners, some 34 million contributors – along with employers – will have to shell out more in monthly contributions starting May.
The President also approved another P1,000 hike effective 2022, or by the end of his term.
“The President has approved a P1,000 pension hike this month with a corresponding 1.5 percent contribution rate hike in May 2017, and increase in monthly salary credit to P20,000 from P16,000,” presidential spokesman Ernesto Abella said in a press briefing at Malacañang.
The Palace had advised media that Duterte would be presiding over the press briefing, but eventually only Abella, SSS president Emmanuel Dooc and SSS chairman Amado Valdez showed up to answer prepared questions from the media.
In approving the pension increase, Abella said the President “seeks to fulfill a social contract with the Filipino people, especially the elderly and the poor who gave the best years of their lives in service.”
Apparently to justify the increase in members’ contribution, he cited the need for SSS to exercise fiscal responsibility to ensure economic sustainability and protect the gains “made by those who have prudently invested in the nation’s future.”
“As the President has emphasized, he is the President of an entire nation and not a particular social class,” Abella said in his opening statement. The funds for the increase would be covered by current contributions and the investment reserve fund, officials added.
In an interview, Dooc said they had recommended a P500 increase but the P1,000 figure would turn out to be the compromise rate, with economic managers opposing moves for government subsidy. He said the increase would reflect in the February pension.
Asked why there was no prior consultation with SSS contributors, Dooc said the SSS is a tripartite body which has commissioners who represent members.
Budget Secretary Benjamin Diokno earlier said in a briefing that any increase in SSS contribution would be viable after Congress approves an income tax reform law possibly by 2018.
Valdez and Dooc also vowed to go after erring firms who fail to properly pay or remit the contributions of their employees. The SSS officials, however, did not say how many companies they would be going after, even as they urged Congress to help them in issuing condonation packages to delinquent employers.
The SSS is also proposing amendments to its charter.
By May 2017, the SSS will impose a 1.5 percent contribution rate increase or 12.5 percent from the current 11 percent contribution rate.
In peso value, the additional total contribution will range from P15 to P740, equally shared by the employer and the employee. The proper perspective is to view the SSS contribution as long-term savings, and not as an expense, officials added.
Earlier, three “leftist” members of the Cabinet called on President Duterte to implement as soon as possible the P2,000 increase in the monthly SSS pension.
Challenging the position of Duterte’s economic managers, secretaries Judy Taguiwalo of the Department of Social Welfare and Development, Rafael Mariano of the Department of Agrarian Reform and Liza Maza of the National Anti-Poverty Commission said the President should honor his promise to raise the SSS pension by P2,000.
In a position paper presented during a Cabinet meeting Monday night, the three secretaries said the commitment made by the “candidate” Duterte was a covenant with the public that he is bound to uphold.
The statement was in reference to a previous remark of Diokno that candidate Duterte is different from President Duterte.
Diokno and other economic managers earlier recommended that Duterte turn down proposals to raise the SSS pension.
Without an increase in contribution rates, the budget chief warned that SSS may face bankruptcy as more funds would end up as pension for retirees.
But in their position paper, the three secretaries maintained that the equation should not be limited between pension hikes and contribution rates.
“The SSS pension fund is not built only through membership contribution by its members. It is also built by prudent investment of the fund in financial instruments that bring yields which exceed at least the inflation rate and the true cost of living for the pensioners,” they said.
“SSS fund managers over the years have demonstrated consistently their readiness to losing billions of pesos in taking bets on how their asset placements would perform, but express extreme pessimism whenever initiatives to improve the lot of the pensioners are considered,” they added.
The secretaries challenged the economic managers to have the political will to address the inefficiencies of SSS, stressing the need for other ways to raise funds to cover the pension hike without increasing the contribution of members.
In addition to the passage of the pension hike, they also pushed for a review and reform of the SSS governance and fund management program, citing a loss of placements amounting to P24.5 billion last year.
They urged Duterte to order the evaluation of the SSS loan and investment portfolio and enforce an effective asset recovery program.
“Inappropriately created loans should be paid by those who benefited from them and criminal charges should be filed and earnestly pursued,” they said.
“(He should also) order the SSS governing body to immediately undertake a program that will address collection efficiency, prudent but optimal fund investment program and earnest commitment to serve the pensioners’ welfare as social investors,” added the secretaries.
Citing a recent report of the Commission on Audit (COA), the secretaries cited the need to recover investments in closed, non-existing or unlisted companies worth P823 million; and to collect delinquent premium contributions amounting to P4.845 billion.
COA also noted the existence of idle assets amounting to P17.95 billion with foregone revenues of P198 million as of 2014, as well as net understatement of total assets by P9.94 billion and of reserves by P11.34 billion in 2015.
“A change in perspective is a prerequisite to fulfill President Duterte’s promise to SSS pensioners,” said the three Cabinet members.
“Let this government continuously show its care for the elderly and the poor. They who have cared for us in our formative and dependent years should be accorded our full support. This is our time to pay forward,” they added.
With the pension increase to benefit about two million pensioners, some 34 million contributors – along with employers – will have to shell out more in monthly contributions starting May.
The President also approved another P1,000 hike effective 2022, or by the end of his term.
“The President has approved a P1,000 pension hike this month with a corresponding 1.5 percent contribution rate hike in May 2017, and increase in monthly salary credit to P20,000 from P16,000,” presidential spokesman Ernesto Abella said in a press briefing at Malacañang.
The Palace had advised media that Duterte would be presiding over the press briefing, but eventually only Abella, SSS president Emmanuel Dooc and SSS chairman Amado Valdez showed up to answer prepared questions from the media.
In approving the pension increase, Abella said the President “seeks to fulfill a social contract with the Filipino people, especially the elderly and the poor who gave the best years of their lives in service.”
Apparently to justify the increase in members’ contribution, he cited the need for SSS to exercise fiscal responsibility to ensure economic sustainability and protect the gains “made by those who have prudently invested in the nation’s future.”
“As the President has emphasized, he is the President of an entire nation and not a particular social class,” Abella said in his opening statement. The funds for the increase would be covered by current contributions and the investment reserve fund, officials added.
In an interview, Dooc said they had recommended a P500 increase but the P1,000 figure would turn out to be the compromise rate, with economic managers opposing moves for government subsidy. He said the increase would reflect in the February pension.
Asked why there was no prior consultation with SSS contributors, Dooc said the SSS is a tripartite body which has commissioners who represent members.
Tax reform can wait
Dooc said economic managers have deemed it necessary for the rate increase to be implemented by May, without waiting for the government to act on the proposed income tax reform package for employees that aims to reduce the income tax rate from 32 percent to 25 percent.Budget Secretary Benjamin Diokno earlier said in a briefing that any increase in SSS contribution would be viable after Congress approves an income tax reform law possibly by 2018.
Valdez and Dooc also vowed to go after erring firms who fail to properly pay or remit the contributions of their employees. The SSS officials, however, did not say how many companies they would be going after, even as they urged Congress to help them in issuing condonation packages to delinquent employers.
The SSS is also proposing amendments to its charter.
By May 2017, the SSS will impose a 1.5 percent contribution rate increase or 12.5 percent from the current 11 percent contribution rate.
In peso value, the additional total contribution will range from P15 to P740, equally shared by the employer and the employee. The proper perspective is to view the SSS contribution as long-term savings, and not as an expense, officials added.
Earlier, three “leftist” members of the Cabinet called on President Duterte to implement as soon as possible the P2,000 increase in the monthly SSS pension.
Challenging the position of Duterte’s economic managers, secretaries Judy Taguiwalo of the Department of Social Welfare and Development, Rafael Mariano of the Department of Agrarian Reform and Liza Maza of the National Anti-Poverty Commission said the President should honor his promise to raise the SSS pension by P2,000.
In a position paper presented during a Cabinet meeting Monday night, the three secretaries said the commitment made by the “candidate” Duterte was a covenant with the public that he is bound to uphold.
The statement was in reference to a previous remark of Diokno that candidate Duterte is different from President Duterte.
Diokno and other economic managers earlier recommended that Duterte turn down proposals to raise the SSS pension.
Without an increase in contribution rates, the budget chief warned that SSS may face bankruptcy as more funds would end up as pension for retirees.
But in their position paper, the three secretaries maintained that the equation should not be limited between pension hikes and contribution rates.
“The SSS pension fund is not built only through membership contribution by its members. It is also built by prudent investment of the fund in financial instruments that bring yields which exceed at least the inflation rate and the true cost of living for the pensioners,” they said.
Fear tactics
They said pensioners should not be held hostage by fear tactics “comprised mostly of the unfounded argument that the fund will go bankrupt if a benefit long due to them is given.”“SSS fund managers over the years have demonstrated consistently their readiness to losing billions of pesos in taking bets on how their asset placements would perform, but express extreme pessimism whenever initiatives to improve the lot of the pensioners are considered,” they added.
The secretaries challenged the economic managers to have the political will to address the inefficiencies of SSS, stressing the need for other ways to raise funds to cover the pension hike without increasing the contribution of members.
In addition to the passage of the pension hike, they also pushed for a review and reform of the SSS governance and fund management program, citing a loss of placements amounting to P24.5 billion last year.
They urged Duterte to order the evaluation of the SSS loan and investment portfolio and enforce an effective asset recovery program.
“Inappropriately created loans should be paid by those who benefited from them and criminal charges should be filed and earnestly pursued,” they said.
“(He should also) order the SSS governing body to immediately undertake a program that will address collection efficiency, prudent but optimal fund investment program and earnest commitment to serve the pensioners’ welfare as social investors,” added the secretaries.
Citing a recent report of the Commission on Audit (COA), the secretaries cited the need to recover investments in closed, non-existing or unlisted companies worth P823 million; and to collect delinquent premium contributions amounting to P4.845 billion.
COA also noted the existence of idle assets amounting to P17.95 billion with foregone revenues of P198 million as of 2014, as well as net understatement of total assets by P9.94 billion and of reserves by P11.34 billion in 2015.
“A change in perspective is a prerequisite to fulfill President Duterte’s promise to SSS pensioners,” said the three Cabinet members.
“Let this government continuously show its care for the elderly and the poor. They who have cared for us in our formative and dependent years should be accorded our full support. This is our time to pay forward,” they added.
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