This refers to the three columns published in The Standard, particularly: the column of Ms. Elizabeth Angsioco entitled, “Social insecurity” published on January 23, 2016; the editorial entitled, “Our own countdown” published on January 25, 2016; and the column of Mr. Jojo Robles entitled, “Beauty and beastliness” published on January 26, 2016.
We would like to inform you that since Rep. Neri Colmenares proposed the pension increase in 2014, SSS has conveyed its position on his proposal. Attached as Annex A is the Chronology of Events of SSS Actions on House Bill 5842 for your reference.
We would also like to clarify that the grant of Performance-Based Bonuses to SSS officials and employees are authorized by the Governance Commission for GOCCs, the oversight body which religiously monitors the performance of GOCCs and grants authority to give the PBB. The grant of PBB is based on the accomplishments of SSS which is being evaluated annually by the GCG.
The PBB is a merit-based incentive being given not only to SSS but to other GOCCs as well. The amount of PBB depends on the performance of the institution and subject to the guidelines of the GCG. SSS is evaluated through a scorecard which contains performance targets for the year. In order to qualify for the PBB, SSS must accomplish at least 90 percent of its GCG-approved performance targets. Our performance scorecard is open to public scrutiny and can be accessed at the SSS website under the transparency seal.
On the other hand, the salary received by SSS officials and employees are in accordance with the SSS Compensation Structure implemented by the Social Security Commission in July 1997. The SSS Compensation Structure was the result of Job Evaluation and Compensation Study conducted by Andersen Consulting which set the SSS salaries in line with the salary levels in the banking and insurance industries which came closest to the kind of services being provided by SSS to its members.
We admit that SSS pensions are low because member contributions are low as well. As a comparison, the SSS contribution rate is only 11 percent of the P16,000 maximum monthly salary credit as against the 21 percent contribution rate based on actual salary in the Government Service Insurance System. Even if we compare the SSS contribution rate with our neighboring countries, the SSS contribution rate is much lower compared with the contribution rate in Malaysia (26.25 percent) and Vietnam (30.50 percent) based on total monthly salary.
We reject the claim that our collection efficiency is only 40 percent which is based on the calculation of Rep. Colmenares and not by SSS. His simple calculation is unreasonable because it did not consider SSS members who have lost their jobs and those who no longer have the capacity to pay.
The alleged collection efficiency is what we call coverage ratio, computed as the number of actively paying members at 12 million over the total members of SSS at 33 million. The 12 million refers to the members who regularly pay their contributions, majority of them in the formal sector while the 33 million comprise the total membership of SSS, which includes those who only paid once and those who pay intermittently, but are qualified for certain benefits so we have to ensure that they could depend on SSS in times of need.
Contrary to Colmenares’ computation, collection efficiency is defined as the amount of contributions that SSS has collected versus the collectible amount. This is computed by dividing contributions by the collectible amount. In the 2013 CoA report, SSS contribution collections stood at P103.1 billion against the collectibles of P116.6 billion. Therefore, SSS collection efficiency in 2013 was at 88 percent. This ratio improved in 2014, as contribution further increased to P120.65 billion from P103.1 billion which resulted to almost 90 percent collection efficiency. This shows that SSS has improved its contribution collections from members in the last several years.
We would like to clarify that information on the P325-billion uncollected revenues of SSS was based on the 2008 data in a letter from former SSS President and Chief Executive Officer Romulo Neri sent to former Congressman Lorenzo R. Tanada III as basis for the contribution penalty condonation implemented in 2010.
Based on the 2013 CoA report, contribution delinquency was down to P13.5 billion. Even if we collect the P13.5 billion contribution delinquency, this would not be sufficient to fund the P2,000 pension increase since for 2016 alone, we will be needing P56 billion to fund the pension increase.
We are in the process of disposing assets through public bidding such as the Manila North Harbour center lots, HK Sun Plaza, Marilao and Villa Josefina properties.From 2006 to 2015, the SSS has sold over 2,100 acquired properties with a total selling price of P 1.2 billion through the annual Housing Fair organized by the Housing and Urban Development Coordinating Council.
On the other hand, about P1 billion worth of assets are already up for bidding such as the HK Sun Plaza which was offered for long-term lease last November 2015. The rest of SSS assets are either for sale, or are retained as SSS property due to their expected increase in value.
The SSS financial statements show that it is managed well. In the past five years, the SSS fund showed tremendous growth and increased the fund life by four years from the previous valuation of 2039. SSS has improved its contribution collections from members particularly those in the formal sector.
After 12 years, when benefit payments outpaced contributions collected, SSS once more experienced contribution surplus starting in 2012. In October 2015, the contribution surplus amounted to P9.9 billion. This indicates that members’ contributions are more than enough to pay out benefits and operating expenses without dipping into the investment income. Prior to 2012, contribution collection alone was not sufficient to pay benefits, and the SSS had to dip into the investment income to cover the deficit.
In terms of revenue, SSS gained P44.5 billion in net revenue in 2014. The average net revenue of SSS quadrupled from P8 billion (2000 to 2009) to P33 billion (2010 to 2014). For the same period, total assets grew by 50 percent from P298 billion in 2010 to P447 billion in October 2015.
On the other hand, total investment and other income generated by SSS has reached P34.5 billion in 2014. The investment income yielded a Return on Investment of 8.74 percent in 2014, outperforming market benchmark indicators like the 10-Year Treasury Bond and the 364-day Treasury Bill which averaged 4.3 percent and 1.8 percent, respectively.
It is unfair to compare SSS to the Home Development Mutual Fund since we have different mandates. The HDMF provides a national savings program and affordable shelter financing for the Filipino worker while SSS primarily administers pension fund for workers in the private sector and provides social security benefits such as sickness, retirement, maternity, disability, death, funeral, and employee’s compensation. Notably, SSS provides more benefits to its members as compared to which primarily finance housing loans.
Aside from pensions, SSS also provides cash assistance for child-birth or maternity, sickness, disability, and death. Even members’ beneficiaries are also taken care of with death benefits or survivorship pension, as well as the funeral grant. Thus, any proposed changes in the benefit structure, or in the amount of pensions must be carefully evaluated to ensure the fund viability of SSS for the benefit of all its members.
MARISSU G. BUGANTE
Vice President
Public Affairs and Special Events Division