The Social Security System (SSS) on Monday said that the 2023 contribution increase would help fund higher benefit disbursements to its members.
SSS President and Chief Executive Officer Michael G. Regino explained that the four-stage contribution rate hike readies the SSS fund for the future needs of its members.
Starting January 1, 2023, the new contribution rate will be pegged at 14 percent, up by one (1) percentage point from the current 13 percent.
“We have already expanded the benefits to our members such as the unemployment benefit, and maternity benefit under the Expanded Maternity Leave Law (EMLL). Both these benefits however have no particular source of funding but since 2019, we have continuously given these benefits to our members,” Regino said.
From 2019 until October 2022, SSS has already disbursed P3.78 billion in unemployment benefits to more than 287,000 members.
Likewise, the annual maternity benefit disbursement rose by 78% from P7.07 billion in 2018 to P12.54 billion in 2022.
The SSS Chief also said that the previous contribution increases boosted benefit disbursements for its members.
“From January 2019 to October 2022, we have released P822.86 billion benefits to our members, which is 38% higher than the P596.30 billion benefit disbursements from January 2015 to December 2018 prior to the amendment of the Social Security Law,” he added.
Moreover, Regino said the latest SSS actuarial valuation revealed that the fund life would last until 2054. “The reforms in the contribution rates are among the factors that helped boosted our fund life brought by Republic Act No. 11199 or the Social Security Act of 2018,” he added.
This is an indicator that the pension fund has enough funds to support the short-term and immediate financial needs of our members and pensioners in the decades to come.
Under the Social Security Act of 2018, SSS should gradually increase the contribution rate until it reaches 15 percent by 2025. The four-tiered contribution increase will ensure the pension fund’s financial viability for the benefit of its members, pensioners, and their beneficiaries.
Under the new rate, employers would shoulder the one (1) percentage point increase for its members with employers. The employee’s share will remain at 4.5 percent, while the employer’s share will increase to 9.5 percent from the current 8.5 percent.
For individual paying members such as self-employed, voluntary, non-working spouse, and OFW members, they will shoulder the whole 14 percent contribution rate since they have no employers.
Moreover, there will be an adjustment to the minimum monthly salary credit (MSC) from P3,000 to P4,000, while the maximum MSC will increase from P25,000 to P30,000.
“The new SSS contribution rate is also a great opportunity to help our members beef up their retirement savings through its mandatory provident fund program or the Worker’s Investment and Savings Program (WISP). We want our members to have a comfortable retirement after their productive years. Every additional peso that a member contributes is more savings for their retirement. This is the principle that we want them to adapt—WORK, SAVE, INVEST, and PROSPER,” Regino concluded.