EXPERTS are proposing the merger of two government-run pension agencies to better serve the country’s senior citizens.
George Ongkeko Jr., senior vice president of Social Security System, and Fernando Gaite, president of the non-government Confederation for Unity, Recognition and Advancement of Government Employees (Courage), on Thursday said merging the two pension funds will pave the way for structural changes and better financial position.
“Besides, merging the SSS with the Government Service Insurance System [GSIS] will correct the big discrepancy in pensions being received by the retirees from both the government and private sectors. Plus there is what we call economy of expense,” said Ongkeko, chief of the SSS actuary division.
“The structural imbalance will be corrected by creating a new charter,” Gaite said.
The two suggested the merger after President Benigno Aquino 3rd the other week vetoed the law that increased the SSS pension by P2,000 a month.
Ongkeko said there is a need to increase the monthly contributions of more than 12 million workers so they could grant the P2,000 across the board pension increase of 2.5 million retirees.
While SSS pensioners could hardly sustain the needs of old age, government retirees are receiving higher pensions.
“That is because government workers are paying higher GSIS dues. But if we combine the two pension funds, we can increase both pensions because we will have lesser operating expense,” Ongkeko said.
He, however, added that there is a quick solution if the government is serious in granting the P2,000 pension hike.
“The government should subsidize the P56 billion needed to fund the P2,000 increase. That subsidy will increase also yearly because [the number of]our pensioners are increasing too,” Ongkeko said.
Gaite said there is a large discrepancy between the contribution rate of GSIS at 21 percent to the 11 percent of SSS.
This imbalance explains the shorter life span of the two pension funds, he added.
While GSIS could survive until 2055, the SSS could only live until 2027 if the P2,000 increase was implemented this year.
Currently, there 41.4 million members of SSS, of which 10.4 million are formal (employees) and 31 million are informal (self-employed).
But only 9.1 million are actively paying their membership monthly dues and mostly of them are employees.
Ongkeko said the current leadership of SSS has been doing its best to bring back gradually the perpetuity of fund through best practices and good management.
In 1980, the fund was to last in perpetuity.
But because contribution rate was stagnant, the fund was projected to last until 2031 in 2003; and 2039 in 2007.
Ongkeko said raising the retirement age to 67, like what has been done in Europe, will help stabilize the SSS fund.
At present, senior citizens can retire at age 60, or after ten years of paying monthly dues.