A NEW year has come and with it is the optimism to step into a new chapter, discover opportunities and embrace what’s coming. Often, the thought of changing for the better is what resonates not only within individuals but within government systems as well.
These changes can include shifts in leadership, new policies, budget allocations or structural reorganizations to address current challenges, governance improvements, evolving needs of society and also set a course for future growth and stability.
A new development aimed at “strengthening the Social Security System (SSS) and to provide long-term financial security for its members” greeted Filipinos on the first day of 2025: a 15-percent contribution hike applicable to private sector employers and employees, household employers, domestic workers, self-employed workers, land-based overseas Filipino workers (OFWs) and voluntary members.
(The complete contribution table for SSS members can be found at https://www.sss.gov.ph/sss-contribution-table/.)
The minimum monthly salary credit (MSC) for business employers, employees, self-employed individuals, voluntary members and nonworking spouses has been raised to P5,000, with the maximum adjusted to P20,000. For household employers and workers, the minimum is now P1,000 while the maximum was set at P20,000. For land-based OFW members, the minimum increased to P8,000, but the maximum remained at P20,000.
Contributions exceeding P20,000 up to the maximum of P35,000 for the MSC are allocated to the member’s individual account under the Mandatory Provident Fund Program, also known as the MySSS Pension Booster. Both the employee and employer share the contribution to this while self-employed, voluntary and OFW members are responsible for the full contribution themselves.
Economic managers proposed, in 2016, a 17-percent increase in SSS members’ contributions to save the state-run social security agency from bankruptcy. This was in response to legislators wanting to hike pension benefits, which the economic managers said could shorten the actuarial life of the SSS fund by 14 to 17 years, or from 2042 to 2025-2028.
A year later, the hike in SSS contributions started. In 2017, then-president Rodrigo Duterte approved an increase in SSS pensions — fulfilling a campaign promise — that was funded by the increase in member contributions.
A year passed and the Security Act of 2018 was signed into law. Under this, a 1-percentage-point increase every two years was imposed on SSS members, starting from 12 percent in 2019 until a final rate of 15 percent in 2025. Private employees would have to pay 5 percent of the contribution while their employers accounted for the remaining 10 percent. With the law in effect, the SSS said the fund’s life was expected to last until 2053.
Aside from ensuring the viability of the SSS fund, designed to provide Filipino workers with social security protection, the increased contributions also mean higher benefits for members, as emphasized by the pension fund. In 2023, then-SSS president and CEO Rolando Ledesma Macasaet said the “contribution hike will not be paid by the lowly worker but by financially-stable employers who can afford such adjustments.”
Even so, some private workers, labor groups and public officials have opposed the increase, calling on the government to immediately suspend it as workers are also bearing the brunt of soaring prices of goods while salaries are stuck at the minimum. However, House Assistant Majority Leader Jude Acidre said a suspension must be carefully studied as it could cause “serious implications” in the actuarial health of the SSS. He also said that the higher contribution rate must also come with higher benefits and pensions for members.
Just like a coin that always has two sides, the increase in SSS contributions can both be beneficial and detrimental to the nearly 50 million Filipino workers. While it may provide better social security benefits and increased financial protection, the immediate financial burden on both employers and employees could strain household budgets. For self-employed individuals and OFWs, the adjustment could be more challenging, potentially affecting their disposable income.
However, let’s remain hopeful that the contributions will lead to improved health care, retirement security and other social services, and that the long-term benefits outweigh the short-term costs, contributing to a more stable and resilient workforce.
Mary Grace Morales-Joboco is a business process solutions/outsourcing principal at P&A Grant Thornton. One of the leading audit, tax, advisory and outsourcing firms in the Philippines, P&A Grant Thornton is composed of 29 partners and 1,500 staff members. We’d like to hear from you! Connect with us on LinkedIn and like us on Facebook at P&A Grant Thornton and email your comments to [email protected]. For more information, visit our website at www.grantthornton.com.ph.
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