SSS aims to develop and promote a viable, universal and equitable social security protection scheme through world-class service.

Transcription

1 PHILIPPINE SOCIAL SECURITY SYSTEM (SSS) 1. The SSS Mandate 1.1 Declaration of Policy It is the policy of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden. Toward this end, the State shall endeavor to extend social security protection to workers and their beneficiaries. 1.2 Statement of Vision SSS aims to develop and promote a viable, universal and equitable social security protection scheme through world-class service. Viable. Social Security protection shall be provided through generations. Current and future generations of workers and retirees are also assured of meaningful benefits in return for their contributions. Universal. Social Security protection shall be provided to all residents of the Philippines, citizens and non-citizens alike, regardless of race, creed, gender, age, geographic location and socio-economic status. Attention will be given especially to the disadvantaged and OFWs. Equitable. Fair and uniform coverage shall be made available to all. Benefit entitlements shall be closely linked with contributions. World-class service. Social Security that the highest standards of service shall be used to ensure total member satisfaction. A multi-skilled, forward-looking and generalist SSS workforce shall provide service that is prompt, accurate and courteous. 1.3 Statement of Corporate Values The SSS aims to institutionalize a corporate culture that instills the core values of Trust, Empowerment and Teamwork 1

2 2. The SSS History In 1948, President Manuel Roxas called for the immediate creation of the Social Security Commission with the idea of providing a social security scheme for Filipino workers in the private sector. Based on the studies conducted by the Commission, the establishment of a system that would benefit and protect wage earners and low-salaried employees was recommended to Congress by President Elpidio Quirino in As a result, the Social Security Law (Republic Act No. 1161) was passed on June 18, 1954 establishing the Social Security System (SSS). This was, however, implemented only after 3 years or on September 1, 1957 after amendments correcting the flaws of the original legislation were passed. In 1957, the SSS started with a seed money of only P500,000, serving 224,156 workers and 1,094 employers with total contributions of P6.6 million. By the end of its first year of operations (in a span of only three months), the System was able to significantly accumulate assets amounting to P6.4 million and pay out P75,000 in benefits. The Social Security Act of 1954 stipulated that membership was compulsory for private employers with at least one hundred employees. The requirement was later reduced to fifty, then five. When the SS Law was amended in June 1960, coverage was extended to all employers. In the beginning, the SSS provided pensions only for retirement and permanent total disability, and lump sum benefits for death, permanent partial disability, and sickness. In 1964, the housing, salary, and educational loan programs were introduced as part of the benefit entitlements of members. On January 1, 1975, the System carried out the new Employees' Compensation (EC) Program (Executive Order No. 441) by offering benefits and medical services to members who suffer from work-related sickness, disability, or death. The social security program was enhanced. Funeral benefits, survivor's pension, and dependent's pension were introduced. The mechanism for the granting of maternity benefits to qualified SSS female members who give birth or suffer from miscarriage was instituted effective January 1, By the end of 1979, seven out of nine benefits recommended by the International Social Security Association (ISSA) were already being administered by the SSS. These benefits cover retirement, survivorship, disability, sickness, maternity, hospitalization, and employment injury. The 1980s ushered in efforts to expand coverage and improve service delivery. In January 1, 1980, through Presidential Decree No. 1636, the SS Law was amended to extend compulsory coverage to certain groups of self-employed persons such as artists, entertainers, proprietors and professionals. Foreign-based employers and diplomatic missions were allowed to register their local employees on a 2

3 voluntary basis. Under the same decree, the SS Commission was also empowered to effect benefit increases whenever actuarially feasible, subject to the approval of the President. In the 1990s, SSS experienced its most dramatic and phenomenal growth in its 33-year history, reaching unparalleled heights in its performance in all aspects of operations. The value of benefits, such as pensions, sickness, maternity and funeral payments rose significantly. New loan programs were introduced and existing ones were enhanced and liberalized to meet members' growing needs. Extending its blanket of protection, the SSS covered new groups of workers: farmers and fishermen, household helpers, overseas contract workers, non-working spouses, and practically all self-employed persons (earning at least P1,000 a month). In 1997, the 40th anniversary of the SSS was highlighted the enactment of the new social security law or the Social Security Act of 1997 (Republic Act 8282) on May 24 which enabled SSS to enhance benefits, expand coverage, and broaden investment alternatives. Moreover, it exempted the SSS from the Attrition and Standardization Laws, thus enabling the System to have a more competitive salary structure as it expanded its branch network. In November 2001, the maximum monthly salary credit (MSC), or the maximum amount to which the SSS contribution rate would be applied, was increased from P12,000 to P15,000 effective 01 January The increase directly improved the benefits of workers earning more than P12,000 monthly. At the heart of the actuarial imbalance currently faced by the SSS is the need to align the SSS contribution rate vis-a-vis the benefits of the program. In the period , nineteen (19) across-the-board pension increases were declared but with no counterpart increase in the contribution rate. In January 2003, however, President Gloria Macapagal-Arroyo approved a one (1) percentage point increase in the SSS contribution, from 8.4 percent to 9.4 percent of covered salaries. This is the first such adjustment in twenty three (23) years. The increase was fully borne by employers (ERs). With adjustment, ERs now pay 6.07%, while the employees (EE) share remains at 3.33%. To further improve financial viability, effective January 2007, President Arroyo approved the another round of one (1) percent increase in the SSS contribution, from 9.4% to 10.4% in contribution to be shouldered by the ERs. 3. The SSS Coverage SEPTEMBER 1, 1957 Coverage of all employers in private business and industry with 50 or more employees commences. SEPTEMBER 1, 1958 Extension of coverage to employers with at least 6 employees. JUNE 18, 1960 Extend coverage to all private enterprises with at least one employee and to certain types of agricultural workers 3

4 JUNE 22, 1963 Extend coverage to employees of foreign governments or international organizations or their wholly owned instrumentalities in the Philippines, upon agreement with the Philippine Government APRIL 23, 1973 Coverage of Filipinos recruited in the Philippines by foreign based employers for employment abroad, on a voluntary basis and in accordance with the rules and regulations as the SS Commission may prescribe JANUARY 1, 1980 Compulsory SSS coverage of certain groups of self-employed persons not yet 61 years of age and earning at least P1,800 per annum. JANUARY 1, 1992 Coverage of farmers and fishermen earning at least P1, per month under the self-employed program. SEPTEMBER 1, 1993 Coverage of house-helpers earning at least P1, per month SEPTEMBER 1, working spouse; approved under SSC Resolution No 597 dated July 26, OCTOBER 15, 1995 Expansion of self-employed, which covers all self employed persons regardless of trade, business or occupation with monthly income of at least P1,000.- MAY 24, 1997 Expansion of coverage to include the following: a) Agricultural workers who are not paid any regular daily wage or who do not work for an interrupted period of at least six months b) Parents employed by children c) Minors employed by parents As of 30 June 2011, there were 29 million individuals registered with the SSS. This is almost 5.5 million higher than the membership since Of the total membership, percent are private sector employees and the rest are self-employed/voluntary workers. There are also about 850,391 employers registered with the SSS. 4

5 In Millions Fellowship Training on Employment Insurance and Employment Injury Insurance 5-13 October 2011 S S S Members hip: As of end-december 2009, coverage efforts posted modest increases, with employer registration increased by 2.4 percent and individual registration climbed by 1.6 percent. Registration of by non-working spouses exhibited the largest increase followed by househelpers and farmers/fishermen. To date, 28,217,932 individual members and 850,391 employermembers comprise the total SSS membership coverage. Employer and Individual Registration, January to December 2009 Item Jan-Dec 2009 Actual Jan-Dec 2008 Actual % Inc/ (Dec) Employer (ER) Registration 42,235 42,418 (0.4) Individual Registration * 647, ,102 (7.8) Employee (EE) Registration 432, ,690 (10.8) - Regular Employed 420, ,938 (12.4) - Househelpers 11,936 4, Self Employed 201, ,884 (0.9) Voluntary 14,584 15,528 (6.1) 4. Coverage Statement of Policies 4.1 Employers and Employees a. Compulsory coverage of the employer shall effect on the first day of operation with at least one (1) employee. b. Compulsory coverage of an employee, who is not over 60 years of age, shall take effect on the first day of employment. 5

6 c. An employee, who is at the same a self-employed individual, may register as a dual member, provided that the current monthly salary credit is below the maximum and is below 55 years of age. d. Each employer shall immediately report to the SSS the names, dates of birth, civil status, occupations and salaries of all its employees who are subject to compulsory coverage. Failure to report for coverage will render the employer liable, in case of their sickness, disability or death, to pay the said employee or his legal heirs, damages equivalent to the benefits to which they would have been entitled had they been reported on time. e. Foreign principal and its manning agency, as the authorized agent or representative in the Philippines, shall be jointly and solidarily liable as employers under the Philippine SSS and EC Laws. f. Branches of employers under a decentralized operation shall not be registered separately but shall be assigned an employer branch code. 4.2 Household Employers and House Helpers a. Effective September 1993, a house helper who is not over 60 years of age are subject to compulsory coverage. b. The household employer shall not accomplish registration forms similar to SS Form R-1 and R-1A and shall use his existing SS number in the remittance and reporting of contributions for his house helpers through the Contributions Payment Return Form (SS Form R-5) and Quarterly Collection List (SS Form R-3). 4.3 Individual Members Self-employed a. Coverage shall be compulsory upon a self-employed individual, who is not over 60 years of age, as may be determined by the Social Security Commission under such rules and regulations as it may prescribe, including but not limited to the following, a.1 Effective January 1980 Self-employed professional; Partner and single proprietor of business; Actor and actress, director, scriptwriter, dancer, singer and news correspondent who do not fall within the definition of the term "Employee"; and Professional athlete, coach, trainee, referee and jockey a.2 Effective January Individual farmer and fisherman 6

7 5. FUNDING SCHEME a.3 Effective October Worker in the informal sector such as cigarette vendor, watch-your-car boy, freelance caregiver and the like. b. The monthly earnings declared in the SS Form E-1/E-4 shall be the basis of monthly contribution and monthly salary credit (MSC) of the selfemployed member Non-Working Spouse a. Effective September , a non-working spouse, who is not over 60 years of age, may be covered as a member on a voluntary basis, provided that the spouse is a currently paying employed, self-employed or overseas Filipino worker member with an MSC of at least b. The basis of monthly contribution and Monthly Salary Credit on the nonworking spouse shall be 50% of the working spouse's Monthly Salary Credit Overseas Filipino Worker a. Effective June 1995, an overseas Filipino worker may be covered by the SSS on a voluntary basis. b. The monthly salary declared in the SS Form E-1 shall be the basis of monthly contribution and MSC. c. Overseas Filipino worker who has been issued SS number shall no longer be required to register anew. His coverage status in the database shall be updated as such upon payment of contributions. The basic equation for social security financing relates members contributions and investment income to benefit payments and operating expenses. To wit: Contributions + Investment Income = Benefit Payments + Operating Expenses 7

8 As a social insurance scheme, membership in SSS is mandatory, with some exceptions, such as the unemployed and the underemployed. Contributions are shared between the employee and the employer, with the self-employed members fully paying their premiums. Contributions are pooled, out of which current benefits and operating costs are paid, while excess funds go to reserves that are invested to meet future pensions and other benefits. No means test is required to avail of benefits. Please refer to the illustration below WORKERS & DEPENDENTS CONTRIBUTIONS LOAN REPAYMENTS EMPLOYERS LOANS BENEFITS INVESTMENT INCOME CONTRIBUTIONS RESERVE FUNDS CONTRIBUTIONS INCOME T-BILLS T-NOTES SECURITIES INVESTMENT for SSS fund cycle. The rate of contribution is fixed by law and any benefit enhancement may be granted even if the contribution rate is not increased. The SSS collects 10.4% (7.07% from the employer 3.33% from the employee) of monthly income of members who earn a minimum of P1,000 per month. The SSS invests funds in excess of current benefit payments and operating expenses. These funds may be invested in different instruments such as Government securities, Government infrastructure projects, Government guaranteed loans, Debt instrument of banks for corporate loans, Housing loans, Salary loans, School and hospital loans, Debt instrument of prime corporations, Philippine equities. 6. Benefits The Social Security System administers the Social Security Program and the Employees Compensation (EC) Program for private sector workers. Covered employees are entitled to a package of benefits under the Social Security and Employees Compensation (EC) Programs in the event of death, disability, sickness, maternity and old age. Self-employed and voluntary members also get the same benefits as covered employees, except those benefits under the EC program. 8

9 Social Security provides replacement income for workers and their beneficiaries in times of death, disability, sickness, maternity and old age. The EC Program, on the other hand, provides double compensation to workers whose illness, death or disability is work-related. Social Security (since 1957) Sickness Maternity Disability Retirement Death Funeral Employees Compensation (since 1975) Sickness Disability Death Funeral Medical Services Rehabilitation Services 6.1 Sickness Benefit Sickness benefit is a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury. The amount of sickness benefit per day is equivalent to ninety percent (90%) of the member s average daily salary credit or P per day. A member can be granted sickness benefit for a maximum of 120 days in one calendar year. Any unused portion of the allowable 120 days sickness benefit cannot be carried forward and added to the total number of allowed compensable days for the following year. 6.2 Maternity Benefit The maternity benefit is a daily cash allowance granted to a female member who was unable to work due to childbirth or miscarriage. The maternity benefit is equivalent to 100 percent of the member s average daily salary credit multiplied by 60 days for normal delivery or miscarriage 78 days for caesarian section delivery. A member shall be paid only for the first four (4) deliveries or miscarriages. The maximum amount of benefit for normal delivery or miscarriage is P30, and P39, for caesarian delivery. 6.3 Disability Benefit Cash benefit granted to a member who becomes permanently disabled either partially or totally due to loss or damage of a physical or mental function, which prevents an employee from performing his work, or from being engaged in any gainful occupation. The monthly pension is a cash benefit paid to a disabled member who has paid at least 36 monthly contributions to the SSS prior to the semester of disability. The lump sum amount is granted to those who have not paid the required 36 monthly contributions. 9

10 The amount of the monthly pension will be based on the member s number of paid contributions and the years of membership prior to the semester of contingency. The minimum monthly pension is P1,000 for members with less than 10 credited years of service (CYS); P1,200 with at least 10 CYS and P2,400 with at least 20 CYS. As of December 2010 the average monthly pension for disability is P3, and the highest pension is P23, Cases of partial permanent disabilities A complete and permanent loss or use of any of the following body parts: one thumb one index finger one middle finger one ring finger one little finger hearing of one ear hearing of both ears sight of one eye one big toe one hand one arm one foot one leg one ear both ears Cases of total permanent disabilities The following fall under total permanent disability: 1. complete loss of sight of both eyes; 2. loss of two limbs at or above the ankles or wrists; 3. permanent complete paralysis of two limbs: 4. brain injury resulting to incurable imbecility or insanity; and 5. such cases as determined and approved by the SSS. 6.4 Retirement Benefit Is a cash benefit either in monthly pension or lump sum paid to a member who can no longer work due to old age. A member who is 60 years old, separated from employment or ceased to be self-employed, and has paid at least 120 monthly contributions prior to the semester of retirement or a member who is 65 years old whether employed or not and has paid at least 120 monthly contributions prior to the semester of retirement is qualified for a lifetime pension. However, the lump sum amount is granted to a retiree who has not paid the required 120 monthly contributions. The lump sum amount is equal to the total contributions paid by the member and by the employer including interest. The minimum monthly pension is P1,200 for members with 120 monthly contribution. As of December 2010 the average monthly pension for retirement is P3, and the highest pension is P23,

11 6.5 Death Benefit Is a cash benefit either in monthly pension or lump sum paid to the beneficiaries of a deceased member. The primary beneficiaries are the legitimate dependent spouse until the person remarries and the dependent legitimate, legitimated, or legally adopted, and illegitimate children of the member who are not yet 21 years old. In the absence of primary beneficiaries, the dependent parents shall be the secondary beneficiaries. In their absence, any other person designated by the member as beneficiary in the member s record. The monthly pension is granted to the primary beneficiaries of a deceased member who had paid 36 monthly contributions before the semester of death. The lump sum is the amount granted to the primary beneficiaries of a deceased member who had paid less than 36 monthly contributions before the semester of death. The secondary beneficiaries shall be entitled to a lump sum benefit. The monthly pension depends on the member s paid contributions, including the credited years of service (CYS) and the number of dependent minor children but not to exceed five. The minimum monthly pension is P1,000 for members with less than 10 credited years of service (CYS); P1,200 with at least 10 CYS and P2,400 with at least 20 CYS. As of December 2010 the average monthly pension for death benefit is P3, and the highest pension is P23, Funeral Benefit A funeral grant of P20,000 (effective September 1, 2000) is given to whoever pays the burial expenses of the deceased member or pensioner. 7.0 Member Contributions Member contributions are the primary source of SSS benefits. For the period 2001 to 2010, contributions collection grew at an average of 11 percent annually, from P31.4 billion in 2001 to P79.2 billion in 20. The steady growth of contributions since 2002 was a result of several measures adopted by the SSS In 2009, while slightly below target, contributions collection increased by 5 percent from its year ago level. The growth of contributions collection from P68.9 billion in 2008 to P72.4 billion in 2009 was partly made possible as SSS managed to get the approval of President Arroyo for another one-percentage point increase in the SSS contribution rate to 10.4 percent effective January More importantly, contributions collection was further improved with the continued enhancement of existing programs as well as the introduction of new ones such as: (a) expansion of the 150 teller counter facilities in 92 branches (including the Main Office), (b) expansion of existing payment facilities, (c) implementation of new payment channels for individual members, including 11

12 In Billion Peso Fellowship Training on Employment Insurance and Employment Injury Insurance 5-13 October 2011 the OFWs, and (d) intensified collection efforts by accounts officers and cluster legal units. 8.0 Benefit Payments The SSS does not receive any subsidy from government. Despite this, SSS has never failed to pay for the pensions and other benefits of its members which, in 2009, reached P72.05 billion in benefit claims. The growth in benefit payments from P67.92 billion in 2008, may be attributed largely to the 10 percent across-the-board pension increase effective August 1, The pension increase in September 2006 was the first pension increase since These pension increases were granted in response to the long-standing clamor of its more than one million pensioners and were made possible after having restored financial vigor and strength into the SSS. Retirement and death benefits accounted for more than 84.8 percent of total benefit payouts to members. It was not so long ago when at the SSS, benefit payments exceeded contributions collection. This was the situation that SSS encountered in 2001, a time when the contributions deficit vis-à-vis member s benefits was a yawning P7.6 billion. This was indicative of the actuarial imbalance faced by the pension institution. Through various cost-cutting measures, principal of which was a moratorium on pension enhancements, the SSS deliberately and successfully narrowed this contributions deficit, from the P7.6 billion gap in 2001, to a P0.9 billion gap in 2004 and finally in 2005, a dramatic turnaround in the financial status of SSS with the posting of a surplus of P1.2 billion, the first surplus ever recorded in the last seven (7) years. In 2007, for the third year in a row, SSS contributions collection exceeded benefit payments posting a huge surplus of P1.1 billion, almost three times as much as the P422 million surplus recorded in The contribution-benefit surplus was achieved as contributions collection grew at a faster pace of 17.7 percent vis-à-vis the 16.5 percent growth in benefit payments in Surplus posted in 2008 and 2009 amounted to P961.9 million and P301 million, respectively. 2 Contributions-Benefit Gap: Part of the belt-tightening measures adopted by the SSS was the implementation of the annual confirmation of pensioners program which was aimed at verifying the identity and status of SSS pensioners. The program resulted in the suspension of P2 12

13 billion in pension payments and recovery of P723 million from pensioners who have been verified to have either died, remarried, or have been re-employed. 9.0 Fund Life The sum total of all the efforts of the SSS particularly in the last seven years is an improvement in the actuarial life of the fund. This is a major turnaround because based on the 1999 actuarial valuation, the outlook for the actuarial life of the fund was only until The latest actuarial valuation report in 2003 is showing an additional 16 years in the life of the fund, extending it from 2015 to With the recent improvements in the financial condition of the SSS the fund life was further extended to Actuarial Fund Life of SSS Valuation Year Fund is Expected to Last Year 1990 Perpetuity (Updated 2007 ) 2039 With the improvement in its financial standing, the SSS recently announced a 10 percent across-the-board pension increase for its more than one million pensioners effective August 1, This was the second time that the SSS announced a pension increase in less than a year. The earlier pension increase in September 2006 was the first pension increase since These pension increases were granted in response to the long-standing clamor of its more than one million pensioners and were made possible after having restored financial vigor and strength into the SSS. Such increase will make pensions more meaningful and responsive to the times. 13