Aside from higher sin taxes, transport fares and gasoline, the New Year also signaled the beginning of the new contribution rates of pension fund Social Security System (SSS) and Philippine Health Insurance Corporation (PhilHealth).
Effective January 2014, PhilHealth members who are currently employed will now contribute P200 per month from only P175 last year, while self-employed members will shell out P200 a month from P150.
Meanwhile, monthly contributions of all SSS members rose to 11 percent from 10.4 percent, equivalent to at least P285 for an employee whose monthly compensation is from P2, 250 to P2, 749.
But the contribution will be shared by P90.8 and P194.2 between the employee and employer, respectively.
The new contribution schedule has affected the estimated 30 million individual members and 871,642 employers of SSS.
For minimum wagers in National Capital Region, their new SSS monthly contributions will P945 per month. Of that amount, P308 is shared by the employee while employer will shell out P636.2.
Employees who earn more than P15, 750 per month, their contributions increased to P1, 790, which will also, shared by the employer (P581.3) and employer (P1, 208.7).
On the other hand, a much lower contribution rate increase was imposed on self-employed, voluntary members and members who are overseas Filipino workers.
But despite the increase, SSS insisted that the new contribution rate is still not enough to support the ideal required buffer for any pension fund to sustain its benefits extended to pensioners.
Emilio S. de Quiros Jr., SSS President and Chief Executive Officer, said the minimum contribution rate hike would only expand the pension fund’s “actuarial life” by three-years to 2042.
Currently, SSS actuarial life is only good for the next 26-years or up to 2039, a far cry from the ideal 70 years or until 2083.
The SSS chief said that President Aquino’s 0.6 percent increase in contribution rate is only aimed at reducing the pension fund’s total P1.1 trillion unfunded liabilities by P141 billion.
De Quiros also revealed that unfunded liabilities of state-run pension fund for private-sector workers are growing by eight percent or P80 billion annually.
The inadequacy in members’ contributions, however, de Quiros said is slightly being compensated by the 10 percent return on SSS’ reserve funds due to strong local equities market.
“We’re running at about P385 billion [reserve fund], 10 percent of that would be P38 billion. Compared that with the P80 billion growths in unfunded liability, we still cannot cover the growth of unfunded liabilities,” de Quiros explained.
“Even we bring down the unfunded liabilities, we still need to build up the fund to the point where the income would be more than the growth in the unfunded liabilities, so that there would be a net reduction in unfunded liabilities over time,” he added.
De Quiros suggested that SSS should raise its contribution rate by small increments of about one percent every two to three years, depending on the country’s economic condition.
“Why don’t we put it in small increments?” de Quiros asked referring to contribution rate. “We need to look at the economy as well, because this is going to be additional expense, additional investments of the employee and additional expense for the employers.”