MANILA, Philippines (4th UPDATE) – President Benigno Aquino III has thumbed down House Bill 5842 which provides for a P2,000 ($41.85)-hike in the monthly pension of Social Security System (SSS) members, Malacañang announced on Thursday, January 14.
In his veto message sent to Senate President Franklin Drilon and Speaker Feliciano Belmonte Jr dated January 12, the President said while he understands the objective of the proposed measure, it would have "dire financial consequences" for the entire SSS membership in the long run.
"While we recognize the objective of the bill to promote the well-being of the country's private sector retirees, we cannot support the bill in its present form because of its dire financial consequences," Aquino said.
"A Two Thousand Peso (P2,000) across-the-board pension increase with a corresponding adjustment of the minimum monthly pension will result in substantial negative income for the Social Security System," he added.
The President explained that the proposed pension increase per retiree, multiplied by the more than two million pensioners, is equivalent to a total payout of P56 billion ($1.17 billion) per year.
He said that against the annual SSS investment income of P30 billion ($627.85 million) to P40 billion ($837.14 million), the total payout for pensioners under the measure would result in a deficit of P16 billion ($334.86 million) to P26 billion ($544.15 million) annually.
Aquino added that given the projected deficit, the SSS "will be constrained to draw from and use its Investment Reserve Fund (IRF) to support the pension increase. Consequently, the IRF will diminish over the years, eventually reaching zero by the year 2029."
"The stability of the entire benefit system, whose present membership comprises about 31 million individuals, will be seriously compromised in favor of two (2) million pensioners and their dependents. In view of these considerations, I am constrained to veto the abovementioned enrolled bill," he said.
The House of Representatives passed HB 5842 on third and final reading in June last year; the Senate adopted it in toto in November 9. The bill was transmitted to Malacañang for the President's signature in mid-December.
Bayan Muna party-list Representative Neri Colmenares, the principal author of the bill, called on his fellow lawmakers to override the presidential veto on HB 5842.
Under the Constitution, Congress has the power to override a presidential veto with a two-thirds vote in the House and in the Senate.
"It's 217 [or 218] votes to override the veto of the President. Ipakita naman namin na kami sa Kongreso [at] sa Senado na kakampi kami ng taumbayan (Let's show that we in the House and in the Senate are with the people)," Colmenares, a senatorial aspirant, said in an interview on radio dzMM.
"The concern is the amount the pensioners receive is not enough....That's really insensitive of the President. [That's] anti-poor and anti-pensioners," he added.
Asked if the House leadership would be keen on overriding the decision, House Majority Leader Mandaluyong Representative Neptali Gonzales II told Rappler in a text message: "I don't think so."
Gonzales, an administration lawmaker, explained that the absence of HB 5482's twin bill – HB 6112 – might have prompted the presidential veto on the proposed pension hike.
HB 6112 seeks to secure the SSS from bankruptcy by authorizing its board to increase contributions. The House passed the bill on third reading in November last year, but the Senate failed to act on it.
"When we approved the bill that increased the pension benefits by P2,000, we likewise approved [the] accompanying bill," Gonzales explained.
"While the Senate approved the pension increase, it failed to approve the accompanying bill. Thus, the President opted not to play politics and instead was forced to veto the bill to prevent SSS from being bankrupt," he added.
Senate President Franklin Drilon said while he differed with the President's decision, the Senate respects it.
"If the President, after a thorough review of the bill, believed that the enactment of the measure would, in the long run, negatively impact on the agency’s fund life and ability to provide a meaningful social security protection to its members and beneficiaries, then we fully respect his judgment," Drilon said in a statement
He expressed confidence that Malacañang is already "looking into other alternatives that will help the pensioners, without compromising the viability of the SSS as an institution tasked by the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs of the people."
Drilon said that the Senate, for its part, "will not be hindered" by the presidential veto. "We will look at it again and we will work hard to perfect the bill and finally give the people what [they] so deserve," he said.
Senator Juan Edgardo Angara, chairman of the Senate committee on ways and means, said that a "compromise formula" may be arrived at later on.
"Going forward, perhaps a compromise formula can be developed which increases pensions but also addresses sustainability issues. At this stage, it may be too late for legislative action but nothing prevents executive action," he said.
Senate President Pro Tempore Ralph Recto, author of the Senate version of the bill, also suggested executive action. He said the President can recommend to the SSS board a lower pension hike "which he thinks is suitable, and supportable by SSS finances."
Recto said this be enforced through an SSS Board resolution. He added that lawmakers tried to take the legislative route since the SSS board had frozen pension amelioration measures.
Senator Cynthia Villar, chair of the Senate committee on government corporations and public enterprises, said: "We will try to look for alternative ways to help the pensioners. If unable, we will prioritize the passage of the same bill next Congress."
Drilon said that in the 16th Congress, HB 5842 is the first measure vetoed by the President, who had signed into law other measures, including the mandatory Philhealth coverage for all senior citizens and the law that raises the tax exemption ceiling on the 13th month pay.
On Twitter, Gabriela Party-list Representative Luz Ilagan described the President's action as "heartless and callous." She tweeted, "SSS is in good financial standing and gives huge bonuses to [executives]!"
Militant labor group Kilusang Mayo Uno slammed Aquino for rejecting the measure and urged all Filipinos to express their "disappointment, dismay, condemnation and anger" over the decision on social media.
"We condemn President Noynoy Aquino for vetoing the SSS pension hike. He has again shown that he is heartless (#WalangPuso) towards SSS pensioners, workers and all Filipinos. He has again shown that hardworking Filipinos are being run over by corruption, patronage and pro-business bias in his so-called Daang Matuwid (Straight Path)," it said in a statement.
It dismissed the President's explanation for the measure as "a lie and a mere scare tactic" and maintained that the SSS can fund it.
"The SSS can further extend its fund life by improving its collection efficiency, penalizing employers who fail to remit members’ contributions, doing away with huge bonuses for its board members, and reducing its administrative costs. The SSS’s collection efficiency is currently at the disgusting 40% level," KMU said. – with a report from Patty Pasion/Rappler.com
US$1 = P47.78