22 January 2014

Unanswered Questions from SSS Bonuses

Social Security System
It seems they still are not aware of what the insurance members wanted to hear and explained properly. It seems that the simple answer to a very simple question still eludes them.

Average Filipino workers who are paying their Social Security System (SSS) insurance premium regularly wanted to know why year-end bonuses were rewarded to their executives when no improvement was seen and felt.

If anybody is willing to visit the SSS satellite office in Kalentong, Mandaluyong they will bear witness to the long queue and rude behaviour of several personnel there.

The pension fund's President and Chief Executive Officer (CEO) Emilio de Quiros told Headstart on ANC last 14 January that the bonuses received came from profits. If the SSS did indeed earned a hefty profit from investing the member’s mandatory contribution since 2010, then why was this profit not plowed back to the members in the form of dividends. Is this a hard question to ask?

The bonuses were allotted for "getting our management team to perform well," adedd de Quiros, who himself received a PhP 1-million performance incentive at the end of 2013. "The bonus is from the amount of income that we got from investing properly."

We already know it was from the investment of member’s contribution, but another question begs an answer. What are the parameters and indicators to measure “management teams” performance? De Quiros admitted that the management did well, so does this mean the management was effective in making sure that membership contribution will not be increased?

To answer the question above, it is apparent that “satisfactory performance” means that starting January 2014, SSS members will be compelled to pay higher contributions to extend the pension fund's life.

Under the new scheme monthly contributions to the state-run pension fund will increase from 10.4 percent to 11 percent of an employee's monthly salary. At the same time, higher contributions will result in additional benefits, including higher entitlements for maternity benefits from PhP 30,000 to PhP 32,000, among others.

Without increasing contributions, the Philippines' pension fund for private employees will only last 25 years, de Quiros said.

Again, why not spend the reported PhP 30 billion earning since 2010 to address the above scenarios and ensuring that membership contribution remains at the current level? If you can do that, then you deserve the year-end bonus, otherwise expect more criticism and audit of pension contribution.