By Chino S. Leyco
State-run Social Security System (SSS) has deferred the planned increase in contribution as the pension fund awaits the passage of the tax reform measure aiming to lower personal income tax rates.
Emmanuel F. Dooc, SSS president and chief executive officer, announced that the pension fund for private sector employees is deferring the collection of higher contribution from its members from this year to 2018.
Dooc explained they will instead wait for the first package of the comprehensive tax reform program (CTRP) to be passed into law so that SSS members will have extra income for higher contribution.
“What we want is the increase in contribution, but we’re willing to postpone that to next year,” Dooc told reporters in a chance interview at the Department of Finance’s headquarters in Manila.
“We believe that if the tax reform is approved, somehow, the increase in contribution will be less burdensome for our members,” the SSS chief added.
However, Dooc assured that SSS has other revenue measures to enhance the pension fund’s financial standing following the recent adjustment in pensioners’ monthly pension by R1,000.
He also assured that SSS would not ask for financial support or subsidy from the national government to finance the increase in members’ monthly pensions.
“Hopefully, [the tax reform will be] approved this year, but we have other measures. The tax reform will [just help] provide relief to our members — they will have more spending money and to some extent the employers will benefit from lower corporate taxes,” Dooc said.
Originally, SSS contribution rate should have been raised by 1.5 percentage points to 12.5 percent as early as May this year, bringing the contribution range to R15 from R740.
But given the unpopularity of the plan, SSS did not implement the increase in contribution that was approved by President Rodrigo R. Duterte last January.
The pension fund earlier released P33 billion to more than two million retirees after President Duterte approved the pension hike. However, the move shortened the SSS fund life to year 2032 from 2042.
The pension increase was among President Duterte’s promises during the 2016 presidential campaign.
Last Wednesday night, the House of Representatives passed on third and final reading the first tax reform package of the Duterte administration, which once passed into law, would generate about R82 billion in fresh revenues.
The measure seeks higher taxes on fuel and sweetened drinks in exchange for lower personal income tax rates.
The tax reform is a crucial measure for the government’s “golden age of infrastructure.”
Under the plan, the Duterte administration will raise public spending on infrastructure to 7.1 percent of gross domestic product (GDP) by 2022 from the present 5.4 percent level.