Unfair

I disagree with the allegation of Ibarra Malonzo, a member of the Social Security Commission representing labor, that there is no legal provision to adjust SSS pensions on a periodic basis. The SSS Act of 1997 expressly provides for periodic adjustments of pensions. [See Section 4(7)(b)(2).]

He presents options to finance the proposed pension increase, but finds them “unwise.” I disagree.

Option 1 can use SSS earnings to finance the proposed increase.  He argues: “If this course is followed, the  IRF (investment reserve fund)  will dry up in 2029, instead of lasting until its projected fund life of 2042.

“Once the IRF is drawn to zero by year 2029, SSS will not be able to pay the benefits due its members and its operation expenses.  In short, SSS will be bankrupt.” He erroneously assumes that the government will simply do nothing to avert such bankruptcy.

Option 2 (increase contribution rate) “is going to be a hard sell.” Maybe, but this is precisely the challenge that should be surmounted before his imagined 2029 bankruptcy.

Option 3 (expanding SSS coverage) “would require institutional reforms and cannot happen overnight.” Maybe, but his imagined 2029 bankruptcy is 14 years from now and this should be enough to effect the required institutional reforms.

Option 4 is the guarantee under the SSS Act of 1997 to “ensure the maintenance of an adequate fund balance for SSS” and payment of the SSS benefits. “Is there enough fiscal space for government to subsidize SSS?” There is!

In 2014 (See Department of Finance website), the budget deficit was a mere -1.4 percent or just 0.6 percent of our 2014 gross domestic product.  This compares favorably well with, say,  Indonesia (-2.25 percent), the United States (-2.80 percent) and Japan (-7.70 percent).

Malonzo views the “deep-seated problems of SSS” within the narrow perspective of institutional viability, but he must bear in mind that the raison d’etre of SSS is not to exist sans institutional problems, but rather ensure that, say, its old pensioners be given their just deserts. The hardship of these pensioners should be more depressing to him than his “sudden collapse” phantasm.

He claims that “there are other better uses [f]or this money.”  He mentions that, for  instance, “the poor and near-poor senior citizens (altogether numbering 2 million) can each  receive P13,000 a year (P1,000 x 13 months).”  His sense of “better” appears out of tune.

Admittedly, they should be helped, too, but not at the expense of the equally “poor and near-poor citizens” who are SSS pensioners.  His proposal is Pareto suboptimal.

He proposes that the government should instead subsidize the entire SSS contributions of, say, vendors, farmers and fishers. Unfair!

These workers do not usually pay income tax while the employed SSS members do pay via salary deduction. Why should nontaxpayers be entitled to a greater proportionate share of public money?

He defines those with monthly income below P8,000 a month as “poor and near-poor.” But why should he exclude the equally poor SSS pensioners from his proposed subsidy? Unfair!

(Eduardo R. Alicias Jr. is an SSS pensioner. He can be reached at [email protected].)