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Freelance HB 4365: Meaningful protection?
Just recently, a bill was filed in the Congress pushing for an increase in the minimum monthly pension of private sector’s retirees to P7000 from P1200 to address the growing cost of basic needs. The proposal looks good if at face value, but the proposition failed to see how much it can imperil the nation’s private-pension fund, which is rigorously chasing delinquent employers and inactive members. Are there enough funds to sustain such increase?
The Social Security System, which covers more than 29 million members from the private sector had already commented to House Bill (HB) 4365, which is authored by Bayan Muna party-list Reps. Neri J. Colmenares and Teodoro A. Casiño, Jr . The pension fund said that it is not financially feasible as the proposed hike may shorten the fund life.
More than a decade ago, SSS faced a looming financial crisis when benefit payments exceeded collections from contributions and loan payments. As part of its remedy to save the pension fund from mere collapse, previous administrators implemented adjustments in their operating and administrative costs, had sold shares in investments and carried out drastic cuts in the employees’ benefits. It was only in the recent years that the SSS was able to be liquid again. In 2007, the SSS implemented a 10-percent increase in the monthly contribution of members, which improved the fund life, not to mention the controversial BDO-EPCI stake sale, where it earned P1.6 billion.
If the congressmen who proposed the pension hike will not compliment it with an increase in members’ contribution, it is likely that future benefit obligations cannot be fulfilled. Even if the fund is viable at present, the SSS said it has to raise contribution rate to provide meaningful benefits to its members. In a previous report, the pension-fund said it plans to raise the contribution rate to 11% of a member’s monthly salary credit (MSC) from the present 10.4%.
The SSS’ condition is valid. The future implication of an action is of more great consequence than what it can give today. Even if the pension fund is financially sound today, one cannot say that it will remain so in the coming years unless an actuarial valuation shows that it is perpetual. What will happen if the members stop paying for their loans and contributions? Benefit disbursements continue regardless a drop in collections. And if this continues, the fund will be in default on financial obligations.
A viable social security protection means it can extend through generations. And this is a major feature that the SSS keeps for years. HB 4365 must be reviewed and closely examined before it is passed by Congress.
You can talk about... HB 4365: Meaningful protection? Tags: • employers • retirees • pension • financial crisis • private sector • social security • monthly pension •
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HB 4365: Meaningful protection?
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