A new year has come and with it is the optimism to step into a new chapter, discover opportunities and embrace what’s coming ahead. 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 aimed at addressing current challenges and improving governance and to address the evolving needs of the society and set a course for future growth and stability.
A new development that is 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 the year 2025. On January 1, the 15% contribution hike has taken effect, which is applicable to the following SSS members:
See the complete contribution table for SSS members here: https://www.sss.gov.ph/sss-contribution-table/
Starting this year, the minimum Monthly Salary Credit (MSC) for business employers, employees, self-employed individuals, voluntary members, and non-working spouses will be raised to P5,000, with the maximum MSC being adjusted to P20,000.
For household employers and workers, the minimum MSC will rise to P1,000, while the maximum will also be set at P20,000. Meanwhile, for land-based OFW members, the minimum MSC will increase to P8,000, with the maximum MSC remaining 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 (MPF) Program, known as the MySSS Pension Booster. Both the employee and employer share the contribution to this, while self-employed, voluntary, and overseas Filipino worker members are responsible for the full contribution themselves.
Key developments in the contribution hike
The Philippines’ economic managers initially proposed in 2016 a 17% increase of SSS members’ contribution to save the state-run social security agency from bankruptcy. With this, they estimate that the proposed hike could shorten the actuarial life of the SSS fund by 14 to 17 years, from 2042 to 2025-2028.
A year later, the hike in SSS contributions started. In 2017, former President Rodrigo Duterte approved an increase in pension for SSS members— a fulfilled promise from his campaign for presidency. The pension increase, however, was funded by an increase as well in member contributions.
A year has passed, and the Security Act of 2018 was signed into law. Under this, it states that a 1% increase would be imposed on SSS members every two years starting from 12% in 2019 until it reaches the final rate of 15% in 2025. For private employees, this means they will pay 5% of the contribution while their employers will cover the remaining 10%. With the act in effect, the SSS said the fund’s life is expected to last until 2053.
A necessary step or financial strain?
With the rise in contribution rates aimed at ensuring the viability of the SSS fund designed to provide Filipino workers with social security protection, this also means that the members also get to enjoy higher benefits, as emphasized by the state-run pension fund. In 2023, former SSS President and Chief Executive Officer Rolando Ledesma Macasaet mentioned that 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 oppose the said hike, calling on the government to immediately suspend it as workers also bear the brunt of soaring prices of goods while salaries are stuck at the minimum. However, House Assistant Majority Leader Jude Acidre said that the suspension must be carefully studied as it can cause “serious implications” in the actuarial health of the SSS, adding that the higher contribution rate must equal with the higher benefits and pension given to its members.
Just like a coin that will always have two sides, the increase in SSS contributions can both be beneficial and detrimental to the nearly 50 million Filipino workers. While they may provide workers with better social security benefits and increased financial protection, the immediate financial burden on both employers and employees may strain household budgets. For self-employed individuals and OFWs, the adjustment could be more challenging, potentially affecting their disposable income.
However, let’s remain to be hopeful that the contributions will lead to improved healthcare, retirement security, and other social services and that the long-term benefits could outweigh the short-term costs, contributing to a more stable and resilient workforce.
As published in The Manila Times, dated 15 January 2025
