STATE-run Social Security System (SSS) will pay higher funeral benefits to its members starting next month.
According to SSS, it will increase funeral benefits from “a fixed amount of P20,000 to a variable amount ranging from a minimum of P20,000 to a maximum of P40,000.”
The increase will depend on the member’s number of contributions and average monthly salary credit (AMSC).
The move came after President Benigno Aquino 3rd approved the benefit enhancement.
SSS Vice President for Benefits Administration Agnes San Jose said the increase will apply to all funeral benefit claims with date of contingency of August 1, 2015 onward.
San Jose added that new funeral benefits will be calculated using the fixed amount of P20,000 plus a percentage of a member’s total contributions and AMSC.
“The proposal to increase funeral benefits came about after our study revealed that the costs of burial services have climbed to an average of more than P40,000 or twice the current fixed amount of benefit SSS disburses for funeral claims,” she said.
SSS funeral benefit is a cash grant given to whoever defrayed the cost of funeral expenses of the deceased SSS member.
At present, the amount of benefit is pegged at P20,000 regardless of the member’s number of contributions.
The new computation, which was formulated by the SSS Actuarial Department, will give due credit to members who are paying more number of contributions and with higher monthly salary credits, the official stated.
A member who has paid one to 19 contributions with an AMSC of P10,000 would receive a benefit ranging from P20,000 to P20,999.
A member with at least 267 contributions and an AMSC of at least P15,000 would be entitled to a maximum benefit of P40,000.
As a result of the increase, funeral claims are projected to go up by almost 12 percent or P332 million per year.
SSS estimates that 50 percent of total funeral claims will be greater than P20,000 per claim.
SSS funeral benefit payouts as of April 2015 totaled P1.01 billion, 2.4 percent higher than P987 million paid during the same period in 2014.
San Jose, however, clarified that the increase will not impair the viability of the SSS funds and will not require a contribution rate hike.
“Funeral benefit disbursements account for only three percent of the total annual benefit payouts of the SSS, so its impact will be minimal,” she said, citing the recent actuarial study conducted by the SSS.