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SSS stonewalls on pension increase veto

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SSS stonewalls on pension increase veto

/ 12:26 AM January 22, 2016

CANBERRA—A showdown between the Aquino administration and Congress looms as the Social Security System management stonewalls in support of President Aquino’s veto of legislation granting an across-the-board P2,000 increase for 2.15 million SSS pensioners.

Acting on cue from the President’s stout defense of his veto, SSS officials fired back at critics of the veto, warning that the increase would lead to an early bankruptcy of the pension fund for private-sector employees.  According to SSS officials, the increase will cost an additional P56 billion yearly payout. That figure is expected to increase every year as the number of pensioners rises, they said in explaining the hard line that has drawn heavy backlash from pensioners who denounced the government as “heartless” and “insensitive.”

“We admit that many of our pensioners need money, [but] we will not turn our back on them,” SSS Commissioner Michael Alimurong declared in a press briefing, adding: “But not all pensioners are poor.”

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But SSS president and CEO Emilio de Quiros Jr. poured petrol on the flames of unrest by warning at the same briefing that the increase would end the fund’s life to a projection of 2042, which is 26 years from now. He engaged in double talk that appeared to set up the pensioners for blame had the President not vetoed the bill providing for the P2,000 increase.

The patronizing tone of De Quiros’ remarks reinforced the perception among pensioners that the government was insensitive to their condition. “We are sensitive to our pensioners but it has to be balanced,” De Quiros said. He sounded uncompromising on the issue of reducing the proposed increase to P500 or P1,000, saying that such amounts would only be feasible if there were corresponding increases in members’ contributions.

After vetoing House Bill No. 5842 last week, the President, faced with an electoral revolt against the administration candidate in the May presidential election, directed the government agencies concerned to look into the feasibility of increasing the SSS monthly pension by P500. And House Speaker Feliciano Belmonte Jr., fearing an electoral massacre in the 2016 polls, came forward with the compromise proposal of a P1,000 raise.

But De Quiros remained adamant. He came back with the argument that, as it is, the current contributions are not enough to cover an increase in the pension. He noted that members even received big interest for their contributions. On the other hand, Rep. Rufus Rodriguez said if it is approved, the P1,000 increase would result in an additional expense of P28 billion out of the SSS average income of P33 billion average annual net revenues (2010-2014). He said the SSS would have to get the money from the investment fund, which would shorten the life span of the SSS fund.

The prospects of De Quiros abandoning the hard line appeared remote. The prospects of Mr. Aquino reversing his veto are similarly remote. Since 1980, SSS contribution rates have increased three times, while pension rates have increased 22 times.

According to former SSS president Corazon de la Paz, who compared the SSS with the Government Service Insurance System, the GSIS requires a steeper contribution from its members. The GSIS rate is 21 percent—that is, 9 percent from the employee and 12 percent from the employer, she pointed out. “Many SSS members only pay on the basis of the [minimum] income of P1,000. That’s just  P100. How can SSS members live by just depending on his or her contribution?” she said.

SSS officials were profuse in their praise of Mr. Aquino for biting the bullet on the proposed pension increase that would have led to the bankruptcy  of the SSS. One commissioner warned that it was “too risky” to implement “the drastic pension increase,” especially since the bill “is silent on any source of funding, and just pins hopes on the next administration to avert depletion of SSS funds.”

To maintain the present fund life of 26 years, this argument went on to say, the SSS would also have to increase the contribution rate from the present 11 percent to 15.8 percent. Without the rate increase, the government would have to subsidize a minimum P130 billion a year starting in 2030, once the Investment Reserve Fund has been fully exhausted.

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“Unpopular as the veto may be, it was the right thing to do. It shows that the President is principled enough to withstand pressure by refusing to support a bill that he knows will lead to the financial ruin of the SSS.  With the veto, we continue to further strengthen the SSS to become sustainable and viable,” the officials said.

At this point, it’s time to say, “Hello, partner, you are pulling our leg and peddling undiluted propaganda, in which the President comes out as a hero.” It’s time to say that what the government has really done with the veto is to pass the costs and pain by slugging SSS members with higher Contributions. This is an unfair tradeoff where the pensioners receive only a pittance of an increase that can’t pay for basic medical needs.

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TAGS: pension increase, Social Security System, SSS
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