With the recent increase of the Social Security System (SSS) contributions from 11 percent to 12 percent, employee members are in for a higher deduction from their monthly salary, with employers needing to shell out more to cover the contributions.
But it’s not all bad news since the increase will extend the SSS fund life and will translate to a number of other benefits such as a higher retirement fund and savings rate. The state-run pension agency plans to increase the monthly contributions to 15 percent by the year 2025.
Beginning 2017, an increase of P1,000 was given to pensioners monthly—but this resulted in the shrinking of the entire fund and the slashing of its lifespan by 10 years. With the 2019 increase in contributions, members and pensioners may now enjoy their benefits for 20 more years until 2045.
SSS Chair Aurora Cruz Ignacio said in an interview that the increase will allow members to apply for higher amounts when it comes to benefits and loan privileges. For example, an employee who earns P20,000 a month will now have a P600 sickness benefit. Previously, it was just P480. In addition, he/she will enjoy a monthly basic pension of P8,000 when he/she retires—which is P1,600 more than the previous P6,400. Members will also be able to take out bigger loans depending on their monthly contributions. In the past, the maximum allowable loan was P16,000. It has since been increased to P20,000. Overseas Filipino Workers will likewise have a minimum of P8,000 monthly salary credit, which is P3,000 more than the previous P5,000.
Moreover, unemployment insurance and expanded maternity leave benefits will be implemented by the SSS.
“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more. The SSS is the cheapest and most accessible pension scheme. All workers, regardless of nature of employment, must save in the pension fund for their future retirement years,” Ignacio also said.
The increase was provided under Republic Act (RA) No. 11199 or the Social Security Act of 2018 signed by President Rodrigo Duterte in February. With this, the SSS expects to collect an additional P31 billion a year. The contribution hike took effect on April 1, and SSS members will in time reap the benefits of this increase, especially as they are forced to learn how to budget properly in the present while saving for the future.