By CNN Philippines, March 20 2019
Image Credit to CNN Philippines
Metro Manila (CNN Philippines, March 20) — Members of the Social Security System (SSS) and their employers will start paying higher contributions this April.
The state pension fund on Tuesday announced that the increase in contribution rates from 11 percent to 12 percent will be implemented starting April 1.
That means that for an employee earning ₱10,000, ₱400 will be slashed from his or her pay check – an increase of ₱36.70 from the current ₱363.30. The employer, meanwhile, will now pay ₱800 instead of ₱736.70, an increase of ₱63.30 for its share.
The SSS said this 1 percentage point hike is just “reasonable,” stressing that it will enable members to save more for retirement.
“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more,” SSS Officer-In-Charge Aurora Ignacio said in a statement.
The minimum and maximum monthly salary credits will also be adjusted to ₱2,000 and ₱20,000 respectively.
“The good news is that those who will save more with SSS under the new maximum Monthly Salary Credit of ₱20,000 will have higher amount of benefits and loan privileges as the Monthly Salary Credit is one of the main factors used in the computation of benefits and loan privileges,” Ignacio added.
She explained that under the new scheme, an employee earning ₱20,000 monthly can enjoy a ₱600 sickness benefit per day, up from the current ₱480. That employee’s monthly basic pension will also increase to ₱8,000 from ₱6,400.
The Social Security Act of 2018, signed by President Rodrigo Duterte in February, allowed the SSS to increase the monthly contribution of its members. It will further increase by 1 percent every other year until it reaches 15 percent in 2025.
The law is expected to generate an additional ₱31 billion for the pension fund, the SSS said, adding 13 more years to its fund life up to 2045.
Critics say the SSS should improve its collection first before implementing any contribution hike but the state pension fund said its collection capabilities have improved under the Duterte administration.
Resigned SSS President and Chief Executive Officer Emmanuel Dooc told CNN Philippines last month that only 16 million out of around 38 million registered SSS members were actively paying.
He explained that some members usually stop paying premiums when their employment ends, but added that this could be addressed now that the new law enables the government to give unemployment benefits. He said this cash assistance will help the members find new jobs.