One of the last hot-button issues that plagued the Aquino administration was the demand to raise pensions all around. Where the former President vetoed the proposed bill that would add an extra Php 2,000 across-the-board increase in the monthly pension of SSS members, then-candidate Rodrigo Duterte stated that he would make it his mission to see the bill through.
Fast-forward to after the elections, and now-president Duterte has put the bill in limbo, stating that he’s eyeing a “win-win situation” with regard to the bill and how it would affect pensioners today and in the future.
The question of why the SSS pension hike won’t come easily is tricky to answer, but here’s a look at the factors that may determine why the president hasn’t approved it yet.
The SSS funding
One of the reasons cited by former president Aquino for his veto of the bill was that while it would benefit over 2 million pensioners, it would burden 30 million SSS members. House Bill No. 5842 would have provided the additional amount to pensioners but would have also “seriously compromised the stability of the entire SSS system” according to Aquino’s statement on the veto.
The same sentiment has been echoed by President Duterte’s economic management team, further stating that the proposed bill could undercut the agency’s funding in as soon as ten years.
The SSS funding has been originally projected to last until 2042. This increase could fully wipe out the agency’s funding by 2027, something that former President Aquino’s staff also advised him of. The state-run agency is constantly looking for ways to bolster its revenue. One such way is to increase members’ contribution rates from the current 11 percent to 15.8 percent, at least, according to Social Security Commission Representative for the General Public Michael Victor N. Alimurung in a report regarding the proposed increase last year.
An increase in contributions is something that may not sit well with most members, which brings us to the second factor that may determine the life of this bill.
Income tax rates in the country come in a bracket affecting every employed individual. You’ve probably heard friends or family get frustrated over the fact that their income taxes are eating much of their salaries.
Budget Secretary Benjamin Diokno is part of the three-man team advising President Duterte on economic matters. While SSS members may balk at the possibility of having to contribute more, Secretary Diokno insists that this is one way that the Php 2,000 pension hike could be made feasible. He further stated that his team has made a proposal to the President regarding the matter, where the increase in pension should come after a reduction in income taxes.
If income tax rates were cut, he stated that workers would have more money and wouldn’t mind the increases in contribution.
There’s a whole host of economic factors between the two stated above that could affect everyone. On one hand, the reduction of income tax could also mean higher prices on goods and services, something that is already currently being pushed.
The former president was heavily criticized for vetoing the bill, being accused of insensitivity towards the needs of senior citizens. President Duterte, on the other hand, is also under fire for “failing” to come through on his promise.
However, Presidential Communications Secretary Martin Andanar stated that the president is meeting with his economic team to discuss further options, while emphasizing that the President does not want to use taxpayers’ money to solve the issue of funding.