In previous posts, we expressed the thoughts and the plans of the government in hiking the Social Security System (SSS) contribution rate. As a matter of fact, this has been emphasized on and has been in the books for quite some time now because they were not sure how impacting the changes will be.
Beginning of April 2019, the SSS contribution rate for workers in the private sector will see an increase. The increase is not drastic; it’s just going to be a one (1) percent increase in the percentage point as a minimum to twelve (12) percent.
Simultaneously, the minimum monthly salary credit (MSC) will also spike from P1,000.00 to P2,000.00 up to P20,000.00. Therefore, the 12-percent hike in the contribution rate will be based on the MSC of each worker.
When was this approved?
This specific issue traces back last 2017 when the Administration approved the P1,000.00 additional in the monthly pension received by pensioners. More so, the SSS governing board, OK-ed this rate increase last 13th of March 2019 and is a petition under the pension fund’s new charter to further extend the life of the fund.
In previous times, only the President could approve and OK rate adjustments in the contribution rates in the Social Security System. Now, they have a governing board.
Going back to what caused this, the fund life of the Social Security System was apparently slashed by approximately ten (10) years to just 2032 when President Duterte and his Administration approved the P1,000.00 addition to the monthly pension of the pensioners last 2017.
With this, the SSS said that they might encounter problems in the fund life but this increase is the answer to their dilemma. From 2032, the fund life now has the projection that the funds will be enough until the year 2045.
Higher monthly salary credit (MSC)
With the increase coming, the minimum and maximum monthly salary credits were hiked as well. Republic Act (R.A.) 11199 increased the minimum MSC to P2,000.00 from it’s original P1,000.00 with the maximum to P20,000.00 from the original P16,000.00.
What does this mean?
Basically, this just means that people or employees who have a monthly compensation less than P2,250.00 will have a minimum MSC of P2,000.00. Their contributions will just be P240 in a month which is in accordance to the 12 percent equivalent.
Read: SSS Online Registration
People earning a salary with P19,750 and above will have a maximum MSC of P20,000.00 so, their contributions will be P2,400.00 on a monthly basis.
Those who are employed in the lower bracket can expect that their employers will shoulder two-thirds (2/3) of the contribution. This is P160.00 for the employer and P80.00 for the employee.
On the other hand, employees who are part of the latter will be contributing P800.00 with their employers giving a contribution of P1,600.00 on a monthly basis.
The schedules had modifications, too. Circular Numbers 2019-05, 2019-06, and 2019-07 contained the new schedule of the Social Security System contributions. These were published last Sunday, the 17th of March 2019.
Ma. Luisa Sebastian, the Social Security System (SSS) Vice President for Public Affairs said in a text message that since the higher contribution rate will be applicable and effective in April, contributions that will be paid in May should reflect the new rates already.
In the Circulars that were published, Aurora Ignacio, SSS Commissioner and Officer In Charge said that these increases in the contribution rates will abide to the Republic Act No. 11199 or the Social Security Act of 2018 which was duly signed by our dear President last month.
What does this act say?
This is what workers and employers will be experiencing; this specific act allowed the Social Security Commission, the governing board of the SSS, to increase and add to the contribution rate by one (1) percentage point every other year beginning 2019 until it reaches fifteen (15) percent by the year 2025.
What about the Self-employed? How is it going to be different for them?
Since they’re also members of the SSS, they will have their contribution rates adjusted, too. They are voluntary members, so they would have to shoulder the full amount of their premium contributions.
Non-working spouses’ contributions will be based on fifty (50) percent of the working spouses MSC.
“Kasambahay” or other domestic workers’ members, their respectful employers would have to shoulder or shell out an amount between P120.00 and P600.00 in the start of April for workers who are earning P5,000.00 a month and below.
The Kasambahay Law under Republic Act No. 10361, or also known as the Act Instituting Policies for the Protection and Welfare of Domestic Workers mandates that people who employ domestic workers should be responsible in paying for the entire contribution of the worker/s.
Domestic workers with monthly compensations of P19,750 and above will need to contribute the same way as private sector workers do – P2,400.00 and P1,600.00 from the employer and P800 from the domestic worker themselves.
How about Overseas Filipino Workers (OFWs)?
Overseas Filipino Workers (OFWs), however, both sea and land-based workers with a minimum MSC of P8,000.00, the contribution rate would be ranging from P960.00 for those who are earning below P8,250.00 on a monthly basis to P2,400.00 for workers who earn P19,750.00 and above.
In the event that the OFW is working where the SSS has existing agreements (bilateral labor) with counterparts in foreign countries, the employers must contribute two-thirds while the remaining amount will be coming out of the pockets of the OFWs themselves.
Which are these countries?
As of the moment, the Philippines has bilateral social security agreements with the following countries:
- Northern Ireland
- The Netherlands
- The United Kingdom
Unfortunately, land-based OFWs who are currently working in countries where the Philippines have no bilateral labor agreements with, the employee or the OFW will have to shoulder and pay for their full contribution.
What do you think about this increase in the contribution rates of all SSS members? Is this just right for both employees and employers who duly abide by the current rules and regulations that our Social Security System has? Would this change be drastic in providing the agency the fund that they need for its lifespan to be longer?
The SSS has seen major changes like the additional days for the maternity leave, the unemployment benefit, and a lot more. All of those have happened during the current Administration and we do hope that it’s all for the greater good.