The head of the Social Security System (SSS) said last Thursday that the state-run pension has mandated an increase in its mandatory contribution.
The increased contribution will translate into “immediate benefits for the country’s 13 million workers and ensure the viability of the SSS fund designed to provide them with social security protection,” said Rolando Ledesma Macacete, SSS President and CEO.
By law, the social security system must gradually increase the contribution rate by one percentage point every two years until it reaches 15 percent by 2025.
“According to the schedule provided under RA 11199, the contribution rate has increased to 14 percent from 13 percent in the previous year,” reads a statement released last Thursday by the SSS.
The social security system said employers would be charged a 1 per cent increase, meaning their contribution would now be at 9.5 per cent. The remaining 4.5 percent will be deducted from the employee.
The Social Security System added that Secretary of the Treasury and Social Security Commission Chairman Benjamin E. Diokno has expressed support for the new contribution rate. SSS said Diokno indicated that increasing the contribution was “the right thing to do for the foundation and its members.”
“Increased contribution will benefit workers with the ability of the social security system to provide a financially viable social protection system for Filipino workers and their families,” said McCassett.
“It will not be a burden on the workers, but the employers will bear it,” he added. Macasaet said workers earning less than 25,000 pesos a month, who make up 78 percent of the employees who pay wages in the social security system, will not be affected.
McCassett said fund officials opposed the various business groups’ request to put a hold on the contribution increase. He said the SSS argument was that “postponing the action would reduce the actuarial life of the fund”.
Groups calling for a suspension of the shareholding increase included the Philippine Chamber of Commerce and Industry (PCCI), the Employers Confederation of the Philippines (ECOP) and the Philippine Exporters Confederation (PECI).
“[We] Due consideration was given to the plight of small employers in previous contribution increases, however [we] In the end it had to work in the interests of the workers and the solvency of the fund in the long run,” the SSS statement read.
Macasaet made it clear that employees will not be required to bear the additional financial burden associated with the increased contribution.
The SSS chief said he “appeals” to the PCCI, ECOP and PECI, “whom we view as important partners to us in our mission to provide social protection to our workers, to treat the contribution increase not as another operating expense but as a noble investment to ensure the continuity of the workers’ pension fund.”
“We appeal to our friends in large corporations to help us provide meaningful protection to working class members and their families against the risks of disability, illness, maternity, old age, death and other contingencies that result in loss of income or financial burden,” Macasaet added.