The SSS Reform Agenda

Below is the SSS Proposal in its Reform Agenda To increase the rate of contribution from 10.4% to 11% or a 0.6% increase to be shared equally by the employer and employee; and to raise the maximum salary ceiling from P15,000 to P20,000  it is very simple.  SSS cannot afford to increase pensions if there is no increase in contribution rates.  If it attempts to do so, the life of the fund decreases and when the life of the fund decreases, this means that there will come a time pensioners cannot receive any pensions. i dont think anyone wants that.  do you? i ask relatives and pensioner friends what they would rather have - a short period with a high pension, or a pension for life?  invariably, they choose for life.  so.  want higher pensions?  well, there is only one way to do it.  the contribution rate must be increased. people say that SSS can be more efficient collecting contributions. of course. but this is not the topic of this post.  the maximum salary ceiling is still low.  face it. middle managers, at the very least get more than that. some of my friends laugh at this maximum - a quick and dirty calculation of the expected pension is 40% of the MSC (will post separately on how to compute your pension).  so, if you are paying the maximum, it would be about 40% of 15000, or about 6000.  the pension is adjusted upwards if you have paid for more than 10 years.  Still, what is 6000?  peanuts, my friend says.  to be fair, he is on the high-end of the earning spectrum.  still, 6k is 6k and is better than zero.  this is the reason i encourage ofws and other vms (voluntary members) to pay the maximum amount. still, i agree. what can 6000 buy you in your retirement age.  this translates to 200 pesos/day.  can you live on that? if i had my druthers, i would suggest that the highest MSC be in the 50K range.  But that would probably shock the system too much, so an intermediate step of 30K sounds better to me than 20K. this is a personal opinion, although it is also backed by an actuarial study done sometime 2010. also, anytime SSS increases its MSC, there is a corresponding adjustment in the pension formula.  with the SSS proposal, SSS has already done its actuarial homework, and have an adjustment in the pension formula. and it is a fair adjustment.  as a note, GSIS does not have any such maximum MSC.  that has its advantages and disadvantages.  personally and mathematically, i would prefer a maximum limit, but i wish this limit to be high.  the current SSS maximum of 15K is definitely too low. still, the SSS proposal has merit and hopefully it will be approved. businessmen say that the 3% increase is tough.  the other 3% is from the employee. sure.  doing the right thing is always tough. as they say in physics - entropy is the natural state.  or quite simply - chaos. it takes energy to maintain order.