Another SSS contribution rate hike?

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Another SSS contribution rate hike?
The Social Security System’s reserve fund will be exhausted by 2042 if the contribution rate remains unchanged while benefit payments continue to swell, the fund says

MANILA, Philippines – The  Social Security System (SSS) is looking into structural reforms such as rate hike or statutory cap increase for contributions to improve its fund life.

Latest actuarial valuation showed that SSS funds regained a life of 4 years from the previous valuation of 2039 due the increase in contribution rate and monthly salary credit ceiling that took effect in January 2014, the pension fund said Monday, June 22.

SSS pensions were raised by 5% in June 2014, causing a one-year decrease in the fund life, now projected to last until 2042.

“What has to be done immediately are structural reforms. Our investments have been performing remarkably well despite the low interest rate environment, but we can only invest and earn so much,” SSS Chief Actuary George Ongkeko Jr said. 

Ongkeko added that if the contribution rate remains unchanged while benefit payments continue to swell, the SSS’ reserve fund will be exhausted by 2042.

Local first

SSS President and Chief Executive Officer Emilio De Quiros Jr also dismissed earlier reports that the pension fund will deploy a portion of its investment reserve funds abroad, but added it is a possibility if it is line with the SSS law’s principles of “safety, good yield, and liquidity.” (READ: SSS eyes diversification of P3B investible funds)

He said that all investments options allowed by the SSS Charter are being reviewed. “At the moment, we are strengthening our position in the local market. While investing abroad is an option, it is still under study,” De Quiros said.

Section 26 of Republic Act 8282 prescribes cumulative ceilings for the SSS reserve fund as follows: 40% in private securities; 35% in housing; 30% in government financial institutions and corporations; 30% in real estate related investments; 30% in infrastructure projects; 15% in any particular industry; and 7.5% in foreign-currency denominated investments. 

SSS has over P428 billion ($9.51 billion) in investment reserve funds as of April 2015, allocated in government securities at P155.3 billion ($3.45 billion); corporate notes and bonds, P29 billion ($644.58 million); member loans, P76.8 billion ($1.71 billion); bank deposits, P44.6 billion ($991.80 million); equities, P103.9 billion ($2.31 billion); and real estate properties, P18.6 billion ($413.35 million). – Rappler.com

 

$1 = P45.00

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