Pension hike welcome, but entire pension system reform needed–IBON

January 23, 2017

by IBON Foundation


Though welcoming the recent House of Representatives’ (HOR) passage of the Php 2,000 pension hike, research group IBON expressed concern over another simultaneously approved bill that allows the Social Security System (SSS) to raise member contributions without presidential approval. The group said that the Duterte administration should instead address SSS inefficiencies and work towards reforming the entire pension system of which SSS is a small part, to ensure coverage of all the country’s senior citizens, particularly the poor.

Following the persistent lobbying of people’s organizations and progressive Cabinet secretaries,  President Rodrigo S. Duterte recently approved of a Php 2,000 SSS pension hike. A Php 1,000 pension hike will take effect this month followed by another Php1,000 hike in 2022.  The HOR then approved House Joint Resolution No. 10 further mandating the SSS pension increase.

However, the HOR also passed House Bill (HB) No. 2158, which allows the SSS board to increase the monthly contributions of its membership without the approval of the Office of the President. A 1.5% member contribution rate increase will be implemented starting May of this year to offset the funds needed for a pension hike. This means a contribution increase from the current 11% to 12.5 percent.

IBON said that relying on increasing SSS contributions to pay for the pension hike is narrow-minded and unfairly places the burden on the SSS membership. Instead, the government should address the SSS inefficiencies pointed out by progressive lawmakers and advocates to be able to source the hike from uncollected funds. Among these are the Php198 million in foregone revenues from idle assets, about Php13.5 billion in collections from delinquent employers and any balance from up to Php325 billion in uncollected revenue.

The Duterte administration should also work towards implementing reforms for the entire pension system. This can include ensuring the coverage of all senior citizens, particularly those in need. IBON estimates that six out of ten (57%) of elderly or 4.5 million of the 7.8 million Filipinos over 60 years old do not receive pensions. Of the 3.4 million senior citizens that receive pensions through the SSS and the Government Service Insurance System (GSIS), or the Php500 monthly stipend under the Expanded Senior Citizens Act of 2010, only the 272,000 GSIS pensioners or 3.5% are brought above the poverty threshold.

IBON said that facilitating the welfare of the country’s most vulnerable citizens like the elderly is a state responsibility, especially considering that many Filipinos cannot afford to pay their SSS dues in the midst of pervasive joblessness and low incomes. A more efficient and aggressive tax collection on the wealthiest and biggest corporations will also help to provide pension funds for all Filipinos in their old age. ###