The Social Security System (SSS), a state-run, social insurance program to workers in the private, professional, and informal sectors will finally implement its increase of SSS contribution rate to its members from 11 percent to 12 percent starting this April 2019.
The 1 percent increased rate was approved last March 13 by the SSS governing board and was authorized under the pension fund’s new charter to prolong its fund life.
With the implementation of the new law, the fund life of SSS was slashed by 10 years to 2032 after the administration gave pensioners an additional P1, 000 a month starting 2017 and is planned to last until 2045.
Meanwhile, the recently published circular nos. 2019-05, 2019-06, and 2019-07 mentioned the new schedule of social security contributions.
SSS Vice President for public affairs, Maria Luisa Sebastian, said that since the higher SSS contribution rate would be applicable in April, members of the SSS will feel the effect of the new rate contribution this coming May.
Aurora Ignacio, SSS Commissioner and Officer in Charge, said in the contribution rate increase was pursuant to Republic Act No. 11199 also known as the Social Security Act of 2018, which President Rodrigo Duterte signed recently.
In the new law, the Social Security Commission, the pension fund’s governing board, is now allowed to increase the contribution rate by 1 percentage point every other year starting 2019 until it reached 15 percent by 2025 unlike before wherein the President is the only one who can approve contribution rate adjustments.
On the other hand, the RA 11199 also increased the minimum monthly salary credit MSC to P2, 000 from P1, 000, and the maximum MSC to P20, 000 from P16, 000. The 12 percent contribution rate of SSS will be based on the MSC.
The employees with a monthly compensation of less than P2, 250 will have a minimum MSC of P2,000 and must contribute P240 a month, the corresponding 12 percent equivalent and their employers must shoulder two-thirds of the contribution or P160, and employees, P80.
Meanwhile, for the employees who are earning P19, 750 and above have a maximum MSC of P20, 000, will contribute P2, 400 monthly in which the two-thirds of the contribution must come from their employer that is equivalent to P1, 600 and the employee member will then pay P800.
Self-employed and OFWs also included in the 12% SSS contribution rate
Self-employed and voluntary members of the SSS are also incorporated with the 12 percent contribution rate.
Contributions coming from the non-working spouse will be based on 50 percent of his or her working spouse’s MSC.
Meanwhile, the employers of “kasambahay” (housekeeper) members must bear their monthly contribution beginning this April between P120 and P600 for those earning P5, 000 a month and below.
However, the Kasambahay Law mandates that employers must pay the entire contribution.
On the other hand, kasambahay with a monthly salary of P19, 750 and above will have to contribute P2, 400 to P1, 600 from the employer and P800 from the house helper.
For overseas Filipino workers (OFWs) with a minimum MSC of P8, 000, the contribution rate ranges from P960 for those earning below P8, 250 monthly and P2, 400 for those with compensation above P19, 750 monthly.
Employers must contribute two-thirds of the contribution of the sea-based OFWs and land-based OFWs, in which their SSS has existing bilateral labor agreements with their foreign counterparts and the remaining amount will be paid by the OFWs themselves.
The Philippines has bilateral social security agreements with the countries of Austria, Belgium, Canada, Denmark, France, Germany, Japan, the Netherlands, Portugal, Spain, Switzerland, Quebec (Canada), the United Kingdom, and Northern Ireland.
Meanwhile, for the of land-based OFWs who worked in the countries without bilateral labor agreements with the Philippines, employees must pay the full contribution because the RA 11199 provides for mandatory coverage of all OFWs.