National funeral benefit fund

In celebrating its 58th anniversary on September 1, the Social Security System can trumpet its achievements—certainly not in providing pensions to its living beneficiaries of orphans, widows, disabled and retirees—but only in the morbid business of burying its dead members.

President Benigno Aquino III earned the full credit for this when he increased the funeral benefit from P20,000 to a maximum of P40,000 effective last August 1. 

It could probably be his only significant contribution to the programs of SSS in the six years of his presidency.

He made a disruptive innovation by increasing incrementally the present fixed funeral benefit of P20,000 based on the deceased member’s actual contributions —P20,000 plus one-half of one percent of the average monthly salary credit for every monthly contribution.

Every centavo of the monthly salary credit and every single contribution now count in determining the benefit amount.

For instance, if two pensioners contributed on the same monthly salary credit of P1,000 for 120 and 200 months, they presently receive the same minimum pension of P1,200 and the same funeral benefit of P20,000. They would now be entitled to benefits of P20,600 and P21,000, respectively.

This difference of P400 in their funeral benefits could trigger a hot argument between these widows and to defuse this, SSS processors must thoroughly account for the bases of their FB computation.

As a consequence, funeral benefit applications—like pensions—would be processed much longer.

The computation of the benefit amount has become much more complicated compared to the way it was first paid by SSS under Presidential Decree No. 347 that President Ferdinand Marcos approved on December 21, 1973:

“A funeral grant seven hundred fifty pesos to help defray the cost of funeral expenses.”

There couldn’t be any way simpler than this in determining the amount of a social insurance benefit that anyone—rich or poor—was entitled to. Everyone knew how much he would receive without having to train as a professional actuary or as a claims adjudicator. He who once contributed any amount would get P750.

The provision that President Fidel Ramos approved into the Social Security Act of 1997 on May 1, 1997 was also very simple:

“A funeral grant equivalent to twelve thousand pesos (P12,000) shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member, including permanently totally disabled member or retiree.”

President Erap Estrada without amending the law also increased funeral benefits—from P12,000 to P15,000 on August 19, 1998 and to P20,000 on August 23, 2000—merely through the resolutions of the Social Security Commission which he had to approve before they could be implemented.

The recent increase of the funeral benefit to a variable amount up to P40,000 was justified by SSS officials by citing  that “the costs of burial services have climbed to an average of more than P40,000 or twice the current fixed amount of benefit SSS disburses for funeral claims.”

Yes, they increased the funeral benefits of the deceased to meet the rising costs of their burial but wouldn’t increase the pensions of us the living pensioners so we could cope up with inflation.

This benefit increase is for our survivors, and not for us.

Aren’t they only engaging their Government Service Insurance System counterparts in a childish play to determine who pays higher benefits? Because they couldn’t keep up with the generous GSIS pensions, they could at least brag that they now pay the higher funeral benefit.

Undoubtedly, SSS officials have made widows worry less about burial expenses. They need not spend all the little extra money to feed the mourners during the burial rites. They could save some of it for their basic consumption later.

Still, my senior citizen friends who have become cynics lately keep commenting sarcastically that this increase would benefit only the funeral parlors and fraud syndicates.

The increase costs money, and when SSS officials said that “funeral claims are seen to jump nearly 12 percent or P332 million per year,” we believed them.

But when they assured us that it wouldn’t “result to a contribution rate hike,” we suspected that we were being fooled. 

They didn’t disclose where the funding would come from and probably assumed that members would now contribute more after the FB amount has been pegged to contributions. Do they realize that additional contributions raise accordingly benefit obligations?

The plain truth is that any FB increase reduces the funds that are needed to increase our pensions.

The new FB amount—capped at P40,000—only highlighted how disproportionately much higher it has become compared to pensions. This cap could even be lifted any time by a clueless president like PNoy who would prioritize an FB increase over a much-needed pension increase.

With their meager and stagnant pensions, my senior citizen friends lament in frustration that they are now worth more to their families dead than alive because of their much higher FB.

And they ask: “Once our national pension system, has SSS retrogressed into being the national funeral benefit fund?”

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