Budget chief says data doesn’t support promised SSS pension hike

January 4, 2017

Congress and the Social Security System board of trustees should not burden President Rodrigo Duterte in deciding on the proposed P2,000 across-the-board increase in the pension of its members despite the promise he made when he was running for the presidency, his budget chief said on Tuesday.

In a press briefing in Malacanang, Budget Secretary Benjamin Diokno said "candidate Duterte" is different from "President Duterte," similar to "candidate Trump" from "President Trump."

"You made promise but once you look on the data, you realized it's not possible. That's where I'm coming from," Diokno said.

If the president would still decide to increase the SSS pension despite the economic managers position, Diokno said, "I mean I'm just doing my job. If he decides otherwise, I have done my job."

Diokno, along with Socioeconomic Planning Secretary Ernesto Pernia and Finance Secretary Carlos Dominguez III, submitted a memorandum to Duterte opposing a congressional joint resolution for the P2,000 across-the-board increase for 2.2 million SSS pensioners unless the contribution of its members would be raised.

The SSS Board has also a memorandum for the president for the increase on the pension, Diokno said. The 17th Congress revived the SSS pension hike through a joint resolution, now moving in the Senate and the House of Representatives.

A joint resolution, like a bill, requires the approval of both houses and the signature of the President. It has the force and effect of a law if approved, according to the Senate website.

"To me, it's unfair to give the problem to him (Duterte). In fact, it's unfair for Congress to have passed that law, which, as you know, President (Benigno) Aquino (III) vetoed. It should not have reached the president's desk. The Board of Trustees should have exercised leadership and say, 'no, we cannot do it unless we do the following things,' okay," he said.

He said the SSS Board could do many things, such as increase collection efficiency.

"I understand some corporations have been indebted to SSS, maybe they could call on them, right. But you know, when you pass the buck and give it to the President, that to me is unfair for the president," he stressed.

In the memorandum from Duterte's economic managers, they also warned that SSS could go bankrupt if the SSS hike would be approved without the pension firm doing anything.

"What we’re recommending is maybe do it after the tax reform… because in the tax reform, you get more money in your pockets and therefore you are now in a position to contribute a small amount for the pension of those who are already receiving pension, so that’s our solution," Diokno said.

Duterte's economic managers have proposed to raise by as much as 17 percent the contribution of the estimated 33 million SSS members.

The "upward adjustment or restructuring of the contribution rate" aims to prevent bankruptcy of the pension fund, the officials said, citing that the proposed hike in pension of some 2.2 million retirees would unduly jack up the unfunded liabilities of the SSS from P3.5 trillion to P5.9 trillion, the memorandum said.

Duterte admitted he had to find how to raise SSS pensions since that was his promise.

He made the promise following President Benigno Aquino's decision to veto the enrolled bill due to budgetary constraint.

Under the proposed joint resolution of the Senate and the House of Representatives, SSS would implement a staggered P2,000 across-the-board increase in its monthly payments to member-pensioners - the first tranche of P1,000 to be given starting in January 2017 and another P1,000 in January 2019.

Without a corresponding increase in members' contribution, the three secretaries said the congressional proposal would cut the actuarial life of the pension fund by 14 to 17 years from 2042 to 2025-2028 because the SSS will have to cough up an additional P32 billion annually to cover the initial P1,000 hike and P62 billion for the entire P2,000 increase in monthly payments. Celerina Monte/DMS