On the SSS Pension Hike

"In the past five and a half years, the Aquino administration has continuously promoted the enhancement of senior citizen benefits." Click here to learn more about these benefits.

I always strive to keep an open mind that will allow me to be constantly curious and critical when needed. When PNoy vetoed the SSS pension hike, I had to view the issues from two perspectives: 1. as a future pension recipient with years of compulsory contributions; and 2. from a fund management standpoint. The latter required learning as much as I can on the issue, which included reading the views and listening to those who dissent the veto.

My takeaway is that it seems imprudent for the government (on behalf of SSS) to commit to a pension increase that will be immediately applied when the current revenue sources (and collection efficiencies) are insufficient, thereby compromising the future of some 33M active contributors. IMO, pension increases have to be programmed and UNDERTAKEN IN PHASES using a rather simplistic two-pronged approach: INCREASE THE REVENUES and REDUCE OPERATING EXPENSES (OpEx).

To increase revenues, SSS *does* have to *further* increase collection efficiency and interest income from all its investments. SSS has to exercise the strictest prudence in investing its funds because of the nature of its purpose and also because of its size; SSS’ movements can “warp any market.” However, this is not to say that the SSS has been remiss on the above-mentioned items for action. The gains and the initiatives presented in the 2014 SSS Annual Report accessible online attest to this.

On reducing OpEx, we question the compensation and bonuses of SSS executives, forgetting that PNOY CASTIGATED government-owned and controlled corporations (GOCCs) in his 1st SONA and took a hard stance against granting executive bonuses for about five years. We have to note that SSS executives are probably earning significantly less than their counterparts in private companies and that the government has repeatedly issued disallowance memos to SSS. We cannot expect all these SSS problems that have accumulated over the years to be solved by people paid with ‘peanuts.’ We need the best fund management and insurance experts who can manage the BIGGEST INSURANCE COMPANY IN THE COUNTRY—-and sadly, they are all in the private sector where the compensation is attractive.Please note as well that per its charter (RA8282), the SSS must not exceed 15.5B on OpEx in 2014. The SSS only spent HALF of it.

So, in summary, there is a middle ground to the SSS issue. Pension increases have to be carefully studied and programmed, and the government was right on track when it granted a 5% across-the-board pension hike in 2014, notwithstanding ALL the other PRO-SENIOR CITIZENS PROGRAMS that the Daang Matuwid has made possible.

In 2009, Mar Roxas successfully passed Senate Bill 3061, exempting senior citizens from paying 12% EVAT on purchases of medicines so it won’t anymore diminish their 20% discount privilege, while granting greater incentives for drugstore owners who would faithfully comply. I get the sense that this is the kind of level-headed thinking that must prevail in every decision that affects the Filipinos and that would have its own compromises and consequences.


Originally posted on Facebook on 17 January 2016
and on mssyj's blog