Everything has a price
Published by the Visayan Daily Star
Editor-in-Chief & President
Bureau Chief, Dumaguete
MAJA P. DELY
|CARLOS ANTONIO L. LEONARDIA
The profit of the state-run pension fund Social Security System slid by 60 percent in the first half of 2017. The latest SSS data showed that its net revenue in January to June this year dropped from P16.281 billion last year to P6.56 billion.
It can be recalled that President Duterte approved the additional P1,000 monthly cash benefit extended to pensioners in January and SSS released the additional benefit starting March. As such, retirement benefit payments rose to P49.857 billion from P40.118 billion for the same period last year. SSS was able to raise revenue to P96.98 billion from P87.16 billion a year ago, but increased expenditures in the form of benefit payments and operating expenses affected the profitability of the pension fund.
Another tranche of P1,000 monthly benefit to pensioners is expected before the end of President Duterte's term, who has also ordered an increase in member's contribution to compensate for the pension increase. The SSS also plans to sell some P3.45 billion in properties to augment its revenues amid the implementation of the pension increase.
Increasing benefits is a popular decision but if done hastily, without considering the corresponding source of revenues, repercussions are expected. In the case of the SSS, its actuarial life was estimated to be cut by 14-17 years, to 2025-28 from 2042, if members contributions were not increased.
The 60 percent drop in profit and the plan to sell properties should serve as a warning and an urgent reminder for the government and the SSS to act quickly to ensure that those who are contributing to the fund now can still reap their benefits when it is their turn to retire.
Aside from improving collection efficiency and monetizing idle assets, a contribution hike will be necessary if the SSS is to stay alive. To cover the pension increase alone, members should expect an immediate 1.5 percentage point increase in contributions, the first in a series of contribution increases that could go up to 17 percent from the current 11 percent pre-pension increase rate.
Everything has a price. The earlier contributing SSS members start paying for the pension increase, the better the chances of the pension fund surviving. The people in charge of the SSS and the government that mandated the increased benefits cannot waste time and money by delaying the unpopular but inevitable act of increasing member contributions in order to pay the price of populist decisions.*