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A time for increasing pensions and contributions

Common sense tells us that a good time to increase pensions is during a period of high inflation when the pensioners’ purchasing power is continuously reduced.

But a better time to raise them is when the economy is robust and growing, and workers are enjoying a comfortable life. This way, the actively employed workers are able to share their newly-acquired affluence with the impoverished unemployed pensioners.

It is also the best time to increase contributions because contributors wouldn’t mind shelling out extra money to fund the benefits of present and future pensioners.

Looking back, the year 1986 was one such year. In that year, almost 30 years ago, the Social Security System was able to adjust its pensions three times and triple its monthly contribution base from P1,000 to P3,000.

That year was ushered by a 20-percent pension increase that SSS Administrator Gilberto Teodoro recommended and President Ferdinand Marcos approved. 

Undeniably, SSS had the financial resources to grant that increase. Besides, its pensions – even then -- were low and needed adjustments.

Still, it was considered part of FM’s campaign strategy in the snap election that was suddenly scheduled that year on February 7. Many thought that SSS was being used to woo its pensioners and their dependents into voting for him and his vice-presidential teammate - the brilliant former Senate President Arturo Tolentino.

It may have been an unfair allegation, but SSS had just increased pensions by 15 percent on June 1, 1984.

Then the People Power Revolution erupted in February 1986. FM’s downfall was quick, and the accession of PNoy’s mother Cory Aquino as President followed immediately.

By March 11, she had replaced Administrator Teodoro with the future Ambassador to the United States Joey Cuisia, who would stay at SSS until February 19, 1990 before moving on to Central Bank as its governor.

Barely six months as SSS head, Administrator Joey recommended to President Cory Executive Order No. 28 which increased to P200 the prevailing P120 minimum pension that was last set on January 1, 1980.

The E.O. was signed by President Cory on July 16, a day which fell on his 42nd birthday. It could thus be considered a symbolic presidential birthday gift to him aside from being a real bonanza to SSS pensioners.

The year 1986 turned out to be good economically and before it ended, Administrator Joey and President Cory had boldly tripled the maximum contribution base from P1,000 to P3,000 via Executive Order 102.

We didn’t hear protests and complaints about it. Why? Perhaps they were silenced by the euphoria that the EDSA Revolution brought.

Its impact may have been cushioned, too, by the 20 percent pension increase that came along with it - the year’s third pension increase.

The timing of its signing could also be the main reason. Administrator Joey had President Cory sign it on the eve of their first Christmas in office. Indeed, the pension increase was their joint Christmas present to SSS pensioners.

PNoy and his SSS officials are now at about the same situation before 1986. Soon they will have their last SSS anniversary, Christmas and New Year Eve in office.

And if they really want to, they still have time for increasing pensions and contributions.

The minimum pension of P1,200 and maximum contribution base of P16,000 are now simply too low. Converted in international currencies – of which our overseas Filipino workers know very well – they are only worth US$ 26.54 and US$ 353.89.

Without receiving any pension adjustment since that 10 percent increase in 2007 and the 5 percent in 2014, pensioners bear the rising costs of rice, medicine, electricity and transportation.

Why can’t employers be made to pay contributions based on an employee’s entire salary that is not capped at P16,000? This is what government pays for its public servants.

Employers claim they can’t afford this. Yet, PNoy constantly harps about the country’s robust economic growth and its being the fastest historically and among Asian countries.

Thus, if SSS officials cannot conceive of anything better than their financially unviable AlkanSSSya Project for the informal sector, they should actively support the merged version of Senator Bam Aquino’s bill that allocates portions of “sin taxes” for SSS contributions and Representative Neri Colmenares’ pension increase bill.

The lessons of 1986 have taught us that any increase in contributions is best implemented when in tandem with a pension increase.

Also, if PhilHealth benefits, conditional cash transfers and social pensions are now being funded by general taxes, why can’t those of SSS be funded similarly?

Finally, raising pensions and contributions could be effortless if SSS officials would only copy the American model - adjust automatically pensions and contribution bases using government’s annually published price and wage indices.

SSS officials won’t coast along in the remaining months of their term. Instead, they would be made to increase pensions on January 1 – or maybe, later on May 1 – just the way it happened 30 years ago before an election.

And then they would leave to their successors on July 1, 2016 the problematic raising of contributions.

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