Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

REGISTRATION UNIT
475 BILLS AND INDEX SERVI

HOUSE BILL No.

Introduced by Reps. CARLOS ISAGANI T. ZARATE,
ANTONIO L, TINIO, EMMI A. DE JESUS,
FRANCE L, CASTRO, ARLENE D. BROSAS,
ARIEL B. CASILAO, and SARAH JANE I, ELAGO_

AN ACT
MANDATING A TWO THOUSAND PESO (P2,000) ACROSS-THE-BOARD
INCREASE IN THE MONTHLY PENSION WITH CORRESPONDING
ADJUSTMENT OF THE MINIMUM MONTHLY PENSION UNDER THE SOCIAL
SECURITY SYSTEM, AMENDING FOR THE PURPOSE SECTION 12 OF
REPUBLIC ACT 1161, AS AMENDED, OTHERWISE KNOWN AS THE “SOCIAL
» SECURITY ACT OF 1997”

EXPLANATORY NOTE

‘The P2,000 SSS pension increase is feasible, necessary and urgent.

‘The loud clamor of our senior citizens, laborérs, current and retired, for pension reform has
been a long and arduous struggle.

Since 1997, the current pension benefit was nor adjusted enough to meet the current cost of
living standards. The erosion of the value of the 1997 minimum SSS pension to only P518.86 for
1,200 (ten-year contribution) pension and P1,037.72 for P2,400 (twenty-year contribution)
pension, respectively’, only validates the suffering of SSS pensioners all these long years.

Itis by this plight of our senior citizens that lawmakers from both chambers agreed to pass
House Bill 5842 during the 16% Congress, ‘The Flouse of Representatives approved the bill on
June 9, 2015 with a vote of 211-0, while, the Senate adopted the House-approved version en toto
and likewise approved the same on November 9, 2015, with a vote of 15-1.

‘The mother bill, House Bill 3851, was a re-filed version of House Bill 6748. HB 6748 was
approved by the House of Representatives during the 15" Congress. The first and original bill,
House Bill 4365, was filed way back in 2011 by Bayan Muna Partylist Representatives Neri
Colmenates and Teddy Casino in response to the clamor of many senior citizens and SSS
pensioners for an increase in pension.

"Bayan Muna: $88 pension wth ination adustnent, 2015


Yet, on January 12, 2016 President Benigno Aquino vetoed the bill by merely echoing the SSS
position that its fund life shall be depleted by 2029. In fact, his administration even bloated the
projected yearly deficit of SSS should the P2000 pension increase be granted, from the P4 billion
reported by SSS during the August 2015 Senate hearing, to P 16-29 billion, Pres. Aquino
dismissed also the many Congressional proposals aiming to institute policy reforms in SSS and
source out funding for the increase.

‘The SSS, on the many congressional hearings attended by its officials, had continuously painted
a “doomsday” scenario once the pension increase is granted. SSS said its fund life will be
shortened to year 2029, from the current 2043. This, despite admissions that it has increasing,
revenues which stood at P155B by 2014, assets of P427 B and investment reserves of P418B. It
is quite incomprehensible that such reported financial strength could not sustain a P2,000
pension increase.

Contrary to its “doomsday” scenario projection, in reality, SSS will not go bankrupt.

In 2001, when SSS was suffering from a five-year fund life as a result of bad investments, behest
loans and mismanagement by previous administrations, the pension agency did not find having
its lowest fund worrisome enough to initiate instizutional reforms.’ SSS’ claim that a shortening
fund life will lead to bankruptcy is a scheme to scare those who do not understand the actuarial
potential of a 14-year fund life.

‘What SSS failed to note is that over the years, as reflected in its actuarial studies released every
four years, the only time that its fund life reached perpetuity is in 1980, where social security has
just been instituted. The poinc is that; all social security systems will always have a limited fund
life. Some countries have a short fund life of only 12 years or up to 2027° like the United
Kingdom’s. social security system or Canada's whose fund life is only up to 2022", Actuarial
studies, Congress agreed, are mere projections, but Congress recognized that steps must be taken
to fund the pension increase and at the same time, prolong the fund life from the expected
bankruptey period of 2029.

“The unfunded liability argument, which SSS claims amounts to P1.19 Trillion’ is a similar scare
tactic, All government pension schemes have unfunded liabilities, many of which are larger than
the Philippines per capita but none of them went bankrupt.

While SSS insisted that the funds will only be sousced through increase in contributions,
Congress maintained that funds must be sourced from 1) increasing collection efficiency
(Currently, SSS maintains a 35-38% collection rate, which is quite inefficient. A mere 10%
increase in collection efficiency will go a long way); 2) cutting back exorbitant and unjust bonuses
of the SSS Board. It cannot claim that the SSS lack funds to support a pension increase but
awarded its Board members with more than P1 Million bonus each in 2012, and refused to take
back more than P200 Million in retirement packages to its Board Members in 2009. Lastly, cut
back on unnecessary expenses. Holzmann et al. (2000), as cited by Manansan®, found that the
administrative cost of running the SSS is high relative to that of social security systems in other

* hint cis con 2080headines 641 4Vsse-qrns--perantinuoe monn pensions

/a,oou toon rentuplondasumolossfatechmen_dalalti8820(9R 200 cena 17_Juy_ 2014p sighed Septembar 20,2016
«21 Acai Rept of ha Canada Pension Pan. nip Jw ose gc. calenloceboca-elcpn-selbanesleon28 sansa: 1¢
* hos i con =GCG_S at

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‘Hanes, Rosario G. (2008), A Review of Social Insurance in he Phipgines. Number 67, Volume 200M, No.2, hippie Jounal of Development.
Philppine isto for Development Studies.


countries. In 2014, the operating expense (P8.11B) of SSS is still high at 6.73% of total
contributions (P120.65B).

Lastly, SSS will never actually be ‘bankrupt’ because Section 21 of Republic Act 8282 or the SSS
Charter provides that the “Government of the Republic of the Philippines accepts general
responsibility for the solvency of the SSS.”

“The passage of this bill is earnestly sought.

Approved,
Ase ¢ ;
Rep. CARLOST! Za ‘T. ZARA’
Bayan Muna Party-list
ep. ANTO! L. é Rep. EMMI A. DE JESUS
ACT Teachers Party-list Gabriela Women’s Party
[A ae
Rep. FI L. CASTRO EI ‘D. BROSAS
Teadpers Parby-list Gabriela Women’s Party
Rep. Al LB, CASILAO’ Rep. SARAH JANE I. ELAGO

“Arlakpanis Partylist Kabataan Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

475

HOUSE BILL No.

Introduced by Reps. CARLOS ISAGANI T. ZARATE,
ANTONIO L. TINIO, EMMI A. DE JESUS,
FRANCE L, CASTRO, ARLENE D. BROSAS,
ARIEL B, CASILAO, and SARAH JANE I. ELAGO

AN ACT
MANDATING A TWO THOUSAND PESO (P2,000) ACROSS-THE-BOARD
INCREASE IN THE MONTHLY PENSION WITH CORRESPONDING
ADJUSTMENT OF THE MINIMUM MONTHLY PENSION UNDER THE SOCIAL
SECURITY SYSTEM, AMENDING FOR THE PURPOSE SECTION 12 OF
REPUBLIC ACT 1161, AS AMENDED, OTHERWISE KNOWN AS THE “SOCIAL
SECURITY ACT OF 1997”

Be it enacted by the Senate and Flouse of Representatives of the Philippines in Congress assembled:

SECTION 1. Any provision of law to the contrary notwithstanding, the Social Security
Commission is hereby mandated to implement a ‘Two-thousand peso (P2,000) across-the-board
increase in the monthly pension under the Social Security System;

SEC. 2, Section 12 of Republic Act No. 1161, as amended by Republic Act No. 8282, is hereby
further amended to read as fotlows:

“SEC. 12. Monthly Pension. (a) The monthly pension shall
be the highest of the following amounts:
“(1) The sum of the following:
“() ‘Three hundred pesos (P30); plus
« i) Twenty percent (20%) of the average monthly
salary credit; plus

(ii) Two percent (2%) of the average monthly salary
credit for each credited year of service in excess of ten
(1Oyears; or

“(2) Forty percent (40%) of the average monthly salary
credit; or

(3) One thousand pesos (P1,000): Provided, That the
monthly pension shall in no case be paid for an aggregate
amount of less than sixty (60) months.


“(b) Notwithstanding the preceding paragraph, the
minimum MONTHLY pension shall be [One thousand
two
hundred pesos (P1,200)] THREE THOUSAND TWO
HUNDRED PESOS (P3,200) for members with at Jeast
ten (10) credited years of service and [Two thousand four
hundeed pesos (P2,400)] FOUR THOUSAND FOUR
HUNDRED PESOS (P4,400) for those with rwenty (20)
credited years of service.”

SEC. 3. Repealing Clanse, ~ Any law, presidential decree or issuance, executive order, letter of
instruction, administrative order, rule or regulation inconsistent with this Act is hereby repealed,
modified or amended accordingly.

SEC. 4. Effetivity Clause. ~'This Act shall take effect fifteen (15) days after
least two (2) newspapers of general circulation.

s publication in at

Approved,