PNoy would not have vetoed Cong. Neri Colmenares’ bill to increase by P2,000 the pensions of the Social Security System had he applied correctly basic pension principles and relied on undeniable hard data when he decided on it.
On the other hand, we should have capitalized on this veto—which had caught our people’s all-time interest in pensions—to reform SSS.
But we didn’t. Was it because SSS consistently opposed the increase? Emphasizing its unaffordability, SSS diverted our focus to its lack of money for it, estimating that it would cost P56 billion to implement it in the first year, and bankrupt the pension fund by 2029.
It succeeded in skirting the real issue that pensions—10 years after their last meaningful adjustment—have been eroded by inflation and the steady rise in the cost of living.
It’s true that any unfunded pension increase, whether token or significant, would shorten all pension funds’ actuarial life. However, caring pension fiduciaries—acting like the former congressman and defeated senatorial candidate Colmenares—wouldn’t simply say “no” and turn down heartlessly that proposal.
SSS should have outlined the various ways of funding the increase, and endorsed them for decision to the fund contributors—the workers and employers.
It could have called for the government guarantee, if everything else failed.
SSS did declare that contributions had to be increased by 4.8 percent, its assets and properties had to be sold, and government must reallocate funds from other projects or increase taxes to support SSS.
But it didn’t offer these solutions loud enough for PNoy to heed.
Neither did it admit that it had enough reserves to absorb any fund shortfall in the short term and restore it in the future with a series of scheduled contribution increases.
We can never have a static pension system. Pensions have to be adjusted sooner or later.
For instance, had the minimum pension remained at P25 as originally set in the 1954 social security law, then it would buy today nothing but half a kilo of the cheapest rice.
Aren’t we aware that the pension system of the Government Service Insurance System for government workers is superior to that of the SSS? Shouldn’t we equalize the two? After all, GSIS is funded by government, which derives its income mostly from the taxes that we pay.
Consider Mrs. Cruz who had taught for 36 years and has now retired with a final salary of P30,000.
If she taught in a private school, SSS would be giving her a pension of P11,820 or 39 percent of her last pay. This is a 74-percent replacement of P16,000, on which her SSS contributions were based.
But had she taught in a public school, GSIS would be giving her a pension—234 percent higher—of P27,000, which is 90 percent of her final salary.
Why? The magic lies in the contributions that she and her employer had made.
A private school would have contributed P1,178.80 a month to SSS, while a public school’s contribution to GSIS would have been 205 percent more or P3,600. She herself would have contributed P581.30 monthly to SSS, and 364 percent more or P2,700 to GSIS.
No wonder, the amounts of SSS and GSIS pensions are so wide apart.
Unknown to most of us, the military and uniformed personnel (MUP) have a better pension plan. Without directly contributing any, they get as pensions the basic pay of their comrades who are still in active service.
Our congressmen discovered the nature of their pension system when they were about to approve in 2015 a higher pay plan for all government workers.
Because of “pension implications,” the MUPs’ effective compensation—but not their basic pay—was increased by giving additional provisional allowance, hazard pay, and officers’ allowance that MUP pensioners wouldn’t be entitled to receive.
The MUP pensioners are now in the same boat as SSS pensioners, indigent senior citizens who receive P500 as social pension, and the indigent families who get conditional cash transfer benefits of P1,400.
Their pensions are being left to stagnate.
Consider this. When PNoy allowed government pay through Executive Order 203 to reach as much as P1,085,699 a month, pensions were correspondingly increased.
Consequently, the top boss of a government-owned corporation could now receive a monthly pension of P977,129, or 90 percent of that pay from GSIS.
What about his private sector counterpart? No more than P16,000.
Thus, the already superior GSIS pensions have become even more superior to SSS pensions. The gap between them had widened even more because of a clueless PNoy.
When that P2,000 pension increase was vetoed, we entertained some hopes that ensuing debates would awaken us into adopting radical reforms to narrow the already wide gap between public and private sector pensions.
We were mistaken.
President-elect Digong could eventually approve the P2,000 pension increase and require GSIS to impose a pension cap of P300,000, but these would hardly narrow the pension gap.
But a strong-willed and pragmatic leader like him could easily remove this gap by simply mandating SSS and GSIS to implement the same pension system for all.
