Just recently, the Social Security System chief actuary publicly disclosed that the increase in contribution rate to 17 percent is a prerequisite to the pension increase of P2,000, emphasizing that “every P500 pension increase requires a 1.5 contribution rate increase” or P5 of additional contribution every day.
Unnecessarily, he explained that SSS would have been in favor of the pension increase had this pre-requisite been made part of its approval.
The SSS official knew, in fact, that the Social Security Law allowed the SSS to implement both increases in contributions and pensions if only President Benigno Aquino III had been convinced to approve them.
Each of these increases, however, was even opposed by its employer-dominated policymaking board, the Social Security Commission, and never recommended to PNoy.
Such opposition was again reiterated by one of its former employer-commissioners who spoke recently as president of an exporters’ association that the P2,000 pension increase “should not come from the increased contributions of both employers and employees, as both are already burdened by too many deductions.”
He must be kidding. Contrary to his statement, he could have easily verified that they have one of the lowest social security deductions in the world.
And by continuing to compute pensions based on the same low salary cap of P16,000, demands for regular P2,000 pension adjustments would never stop.
For too long now, the SSS has been collecting contributions as if they were dues to be paid willingly and voluntarily by club members who merely lose pension and loan privileges if they do not contribute.
For instance, SSS wouldn’t increase pensions at least once every four years, contrary to the social security law, because it would trigger a corresponding contribution increase that would have displeased workers and employers.
Thus, SSS is ending up prioritizing the interests of active members over those of disabled, retired and deceased members.
Looking back, pioneer SSS officials refused to use “members” in referring to workers or individuals whom the original Social Security Act of 1954 applied.
For them—lawyer Johnny Descalzo, for example—they were “covered employees” of a mandatory national social security program, and not “members” of a voluntary association or club.
And while the law did not define “contributions,” it used contributions that were remitted to SSS to define “premiums.”
The SSS program is now funded by such contributions, and while the SS Law didn’t consider them taxes, those that “an employer refuses or neglects to pay… shall be collected by the SSS in the same manner as taxes are made collectible under the National Internal Revenue Code.”
But SSS officials and employees never collected unpaid contributions as taxes.
Perhaps they don’t know how to collect them in the same manner that Bureau of Internal Revenue taxmen collect their taxes. But with SSS now encountering severe funding problems, they must learn it in compelling delinquent employers to pay their unpaid obligations.
They need not employ an SSS version of General Ronald “Bato” Dela Rosa’s Oplan Tokhang, but by using this authority, they would be more efficient collecting contributions than by merely airing educational and informational campaigns via paid advertisements.
The 1935 American social security law—which was the model of our own legislation—uses “insured” instead of “members” because its social security programs are funded, not by contributions, but by taxes on the payroll in accordance with the Federal Insurance Contributions Act.
Consequently, the tax nature of these contributions is making their collection more expedient.
In the American social security program, a Board of Trustees has been established composed mostly of key government officials with the Secretary of the Treasury as Managing Trustee. Its other members are the Secretary of Labor, Secretary of Health and Human Services, Commissioner of Social Security, and two trustees who are appointed by the American President and confirmed by the Senate to serve for four years.
Their main responsibilities are essential but are limited to reporting annually to Congress the status of the social security trust funds, reviewing the policies that are being followed in managing the trust funds, and recommending changes.
Unlike the members of the Social Security Commission, they do not interfere with the day-to-day administration of the programs nor serve as director on any private corporate board. After all, the trust funds can only be invested in “interest-bearing obligations of the US or in obligations guaranteed as to both principal and interest by the US.”
More importantly, they do not oppose contribution increases.
SSS now considers its mandate to provide meaningful pensions only optional and not obligatory, which it pursues on a best-effort basis. Thus, it seeks first the consent of contributing members before pursuing it, concentrating in activities that please them in the short term. For instance, it continues to loan out to its members P78 billion or 19 percent of trust funds, in violation of its charter limit of ten percent.
By collecting token contributions and lending salary loans that are payable with future pensions, isn’t SSS transforming itself into a savings and loan association?
By all means, we must stop it.