Following lower income tax cuts brought by the tax reform law, the Social Security System (SSS) has revealed plans on increasing the rate of membership contributions.
The current contribution rate which is 11 percent of the monthly salary credit is intended to climb to 14 percent, reflecting a three point increase, said SSS president and CEO Emmanuel Dooc in an interview with The Philippine Star.
According to him, the raise has been planned due to the higher take-home pay of citizens, an effect of the Tax Reform for Acceleration and Inclusion (TRAIN) law, that would allow them to afford the added contribution.
“We feel now that the TRAIN will provide relief in the form of lower taxes to our members so they can now afford to pay the extra additional contributions,” he said.
The hike was originally planned to be at 1.5 percent per year until 2020, supposedly starting on May 2017, succeeding the President’s approval of the monthly benefits raise of SSS pensioners.
However, it wasn’t implemented last year thus the need for a 3 percent increase this year, said Dooc.
“So for practical purposes, to meet our projections, we have to increase it by three percent…It’s nothing new, it’s the same percentage”, according to the SSS chief.
The state fund is also pushing to increase both minimum and maximum salary credit to P4,000 and P20,000 respectively.
On increasing the members’ premium payments, Dooc stressed the need for it, saying it “will improve the finances of the system and enable us to meet the financial obligations, including the pension benefit hike.”
This would also extend the fund life to 2044 after being cut to 2032 due to the hike in pension benefits.
A proposal letter on this has been submitted to Malacañang in June 2017, and the SSS is also arranging to follow up through the Finance secretary this week.
To ratify the contribution increase, the SSS has a two-pronged approach, according to Dooc: the passage of the bill modifying the state fund’s charter, now pending in the Congress, or through the issuance of an executive order by the President.
Story first appeared here.
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