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SSS implements contribution hike

The Social Security System (SSS) said today it has started implementing the provisions of the Republic Act of RA 11199 or the Social Security Act of 2018, which mandated a contribution hike to ensure the financial viability of the state pension fund for private sector workers.

SSS President and Chief Executive Officer Rolando Ledesma Macasaet said the law-mandated contribution increase would translate to immediate benefits to the country’s 13 million workers and will ensure the viability of the SSS fund designed to provide them with social security protection.

Enacted on February 7, 2019 by Congress, the Social Security Act of 2018 rationalized and expanded the powers and duties of the Social Security Commission (SSC) to ensure the long-term viability of the SSS. Under the law, SSS should gradually increase the contribution rate by one percentage point every two years until it reaches 15 percent by 2025.

In accordance with the schedule provided under RA 11199, the contribution rate increased to 14 percent from 13 percent in the previous year. Under the new contribution rate, employers will shoulder the one percent increase, which means their contribution will now be at 9.5 percent. The remaining 4.5 percent will be deducted from the employee.

Finance Secretary and SSC Chairperson Benjamin E. Diokno has expressed his support for the new contribution rate saying, “it is the right thing to do for the institution and its members.”

Macasaet said the implementation of the contribution hike would eventually redound in a system that would serve workers better. “The contribution hike will benefit the workers with the SSS being able to provide a financially viable social protection system to Filipino workers and their families,” Macasaet said. “It will not be a burden on workers but will be shouldered by employers. Workers earning less than P25,000 per month, who comprise 78 percent of SSS-paying employee members, will not be affected,” he added.

Macasaet served as President and General Manager of the Government Service Insurance System (GSIS) during the Duterte administration and was appointed by President Marcos to head the SSS last January 5 to replace former SSS PCEO Michael Regino.

At the same time, Macasaet noted that under existing tax laws, employers would be allowed to deduct their share of the contribution hike from their taxable income. “This underscores a whole-of-nation approach in securing the future of our workers with the Philippine government also contributing in the form of tax relief to employers,” Macasaet explained.

The SSS is being urged by employer groups, such as the Philippine Chamber of Commerce and Industry (PCCI), the Employers Confederation of the Philippines (ECOP), and the Philippine Exporters Confederation Inc. (PECI), to suspend the implementation of the Social Security Act of 2018 that mandates the one percent increase in SSS contributions starting this month.

The request of the employers’ groups was opposed by SSS officials as postponing the measure would reduce the actuarial life of the fund. The SSS said they gave due consideration to the plight of small employers in past contribution hikes, but ultimately had to act in favor of workers’ interests and the fund’s long-term solvency.

In his statement, Macasaet clarified that employees would not be required to shoulder the addition financial burden that goes with the contribution hike.

“The contribution hike will not be paid by the lowly worker but by financially-stable employers who can afford such adjustments. I am appealing to the PCCI, the ECOP, and the PECI, who we consider our valuable partners in our mission to provide social protection to our workers, to treat the contribution hike not as another operational expense but as a noble investment to ensure the viability of the workers’ pension fund,” Macasaet said.

“We appeal to our friends in big business to help us provide meaningful protection to the members of the working class and their families against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden,” he added. “A socially protected working class is our best recipe for continued industrial peace in our country.”

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