SSS hike: finance with no numbers
Singapore—A 6-year-old runs to Tatay Digong. “Triple my allowance!!!”
“Toto, my finance expert kumpares Dominguez, Diokno and Pernia say walay kwarta (no money)!”
“They are tools of the oligarchs. I challenge you to live on P40 a day!”
“P___ng ina (Son of a whore), I’m saving for your college.”
“Your efficiency is only 38 percent. You pay yourself too many bonuses.”
“F_ck you, I’ll improve but where do I get the money today?”
“You promised I could see Coldplay play ‘Yellow’ with crush.”
“Naniwala ang g_go (The idiot believed me). Candidate Digong is different from President Digong.”
“MTRCB appointment na lang?”
The Social Security System (SSS) payout debate sounds like a badly written spat with a 6-year-old.
Why debate finance on everything but numbers?
Imagine a bank. It takes deposits, lends these out, and pays interest to depositors. One seeks a stable bank, not just high interest rates.
The SSS is similar. It takes monthly contributions instead of deposits. It invests these and, from the returns, pays pensions when one retires.
As long as the SSS’ investment returns exceed pensions paid, it can do this forever.
Former Bayan Muna party-list representative Neri Colmenares insists that the SSS can increase pensions by P2,000/month without increasing contributions.
Sounds like magic!
Frustratingly, Colmenares and friends cite everything but directly relevant numbers.
First, they call to increase collection efficiency beyond the present 38 percent. The SSS must collect contributions and fines from delinquent members and employers, and reduce director bonuses.
Common sense! But what are the specific steps? How much money can be generated when? Without specifics, who knows when the SSS can support the extra P2,000/month?
Second, they argue that no pensioner can live on P40/day. Third, President Duterte must be held accountable for his campaign promises, including the SSS hike. True, but again, where will the money come from?
Fourth, they cite tangential statistics. In a Jan. 1 Inquirer.net report (“Stop using bankruptcy as ‘scare tactic’ vs SSS pension hike—solons”), Colmenares argued that by 2015, the SSS had increased its fund life to 2042 in only 14 years. He added the UK and Canada pension fund lives are only up to 2027 and 2022.
This still does not directly tell us where the money will come from.
Finally, the Inquirer summed up, “he said Congress can always provide for subsidies.”
This absurd point undermines the entire proposal.
Unless we want a communist government, we obviously should not make a pension fund unsustainable then have our government subsidize it.
Budget Secretary Benjamin Diokno, with admirable candor, is far clearer. The hike will cost P62 billion a year, shorten fund life by 14 to 17 years and raise unfunded liabilities to P5.9 trillion. It should only be considered with increased contributions, offset by tax reform. Subsidies will be made over his dead body.
Indeed, why not reform the SSS first and ensure it is still there when today’s youth retire?
Colmenares’ response? Someone else has years to figure out where to get money before we subsidize the SSS.
Ridiculously, our public discourse tolerates this brand of finance without numbers, even as we contradictorily lament the post-truth era and rise of populism.
No one argues that we sorely need funds for pensions, not to mention healthcare, tuition and housing. But rallying does not conjure money from thin air!
The SSS campaign is a stark contrast to the intelligent tax reform initiative of Sen. Sonny Angara and Rep. Miro Quimbo. They presented compelling numbers, such as how 84 percent of individual taxpayers do not pay income tax, leaving the 16 percent with an impossible burden. They pinpointed what items in the national budget could be cut back to support tax relief.
If we bewail fake news, should we not elevate public discourse and demand that demagogues and populists emulate Angara and Quimbo instead of instigating rallies?
Why do we consistently glorify those who, like drums, speak loudest, yet ring the most hollow when they demand quick fixes, and demonize those who pursue the slow, unglamorous task of nation-building?
React: [email protected], Twitter @oscarfbtan, facebook.com/OscarFranklinTan.
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