Contrary to allegations of some sectors, the Social Security System (SSS) said that in terms of collection efficiency, it is performing at 88 percent and not 38 percent.
In the wake of claims of poor collections impeding SSS’ ability to fund the P2,000 pension increase, SSS President and Chief Executive Officer Emilio S. de Quiros, Jr. debunked the alleged 38-percent SSS collection efficiency computed by Congressman Neri J. Colmenares in his article released in the Philippine Daily Inquirer last October.
“Collection efficiency is defined as the amount of contributions that SSS has collected versus the collectible amount. This is computed by dividing contributions by the collectible amount,” de Quiros explained.
Based on the 2013 Commission on Audit (COA) report, SSS’ employer delinquency stood at P13.5 billion. This represents the amount that the SSS should have collected from employers as their employees’ contributions. For the same year, SSS contribution collections stood at P103.1 billion, thus the total collectible amount is P116.6 billion, including the P13.5-billion employer delinquency.
“Given SSS contribution collections of P103.1 billion against the collectibles of P116.6 billion, the SSS collection efficiency is at 88 percent. This ratio improved in 2014, as contributions further increased to P120.65 billion from P103.1 billion. Using the same formula, collection efficiency of SSS was higher at almost 90 percent,” de Quiros noted.
During the SSS press conference on January 18, de Quiros presented the financial performance of the pension fund since 2010. One major financial accomplishment was the SSS contribution surplus since 2012, which means that SSS has been able to fund its benefit payouts and operating expenses purely from the contributions of the members, without dipping into its investment income. Prior to 2012, contribution collection alone was not sufficient, and the SSS had to dip into investment income for its service operating costs, pertaining to benefits and operating expenses.
“The alleged 38 percent often cited by legislators as collection efficiency is what we call coverage ratio, computed as the number of actively paying members at 12 million over the total members of SSS at 33 million. The 12 million refers to the members who regularly pay their contributions. The 33 million, on the other hand, is comprised of the total membership of SSS, which includes those who only paid once and those who pay intermittently,” de Quiros said.
Those who do not pay regularly includes members who may have lost employment, those who have been employed abroad as overseas Filipino workers, and those in the informal sector who do not have a regular source of income.
“An individual who has made one contribution to SSS is considered a member, and once a member, always a member. As for those who do not have the means to pay SSS contributions, they cannot be compelled to pay,” de Quiros said.
Based on the World Bank (WB) Pension Database in 2012, the coverage ratio in East Asia and Pacific in which the Philippines belongs is below 40 percent. Another WB study, the Philippine Development Report: Creating More and Better Jobs for 2013, said that an estimated 75 percent of the country’s workers are informally employed, which implies that about 10.4 million workers fall under the formal sector.
Meanwhile, the full-year Labor Force Survey data for 2014 shows that individuals at the working age of 15 and above reached a total of 64 million, while 41.4 million are considered working or actively looking for work, based on the 63 percent labor force participation rate.