Starting next month, the Social Security System will implement a new policy that will have its members and employers paying higher contributions.
In an announcement on Tuesday, the pension fund said the contributions will increase from 11 percent to 12 percent—a 1 percent increase—starting on April 1.
This means that for an employee earning ₱10,000, ₱400 will be slashed from his or her pay check—an increase of ₱36.70 from the current ₱363.30.
The employer, on the other hand, will nore remit ₱800 instead of ₱736.70, an increase of ₱63.30 for its share.
SSS Office-In-Charge Aurora Ignacio defended the increase, saying that the 1 percentage point hike is just “reasonable,” since this would help members to save more for retirement.
“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more,” Ignacio said in a statement.
She added that the minimum and maximum monthly salary credits will also be adjusted to ₱2,000 and ₱20,000 respectively.
"The good news is that those who will save more with SSS under the new maximum Monthly Salary Credit of ₱20,000 will have higher amount of benefits and loan privileges as the Monthly Salary Credit is one of the main factors used in the computation of benefits and loan privileges," Ignacio said.
She added that under the new scheme, employees earning ₱20,000 monthly can enjoy a ₱600 sickness benefit per day, or up from the current ₱480. The employee's monthly basic pension will also increase to ₱8,000 from ₱6,400.
President Rodrigo Duterte signed the Social Security Act of 2018 last February, which allowed the SSS to increase the monthly contribution of its members. It will further increase by 1 percent every other year until it reaches 15 percent in 2025.
The law is expected to generate an additional ₱31 billion for the pension fund, which is equivalent to 13 more years to its fund life up to 2045, according to SSS.
But critics had said that the SSS should instead improve its collection first before implementing any contribution hike.
The state pension fund said, however, that its collection capabilities have improved under the Duterte administration.
The SSS said that some members usually stop paying premiums when their employment ends, but added that this could be addressed now that the new law enables the government to give unemployment benefits. The cash will also help the members find new jobs.