Monday, December 21, 2015

Why the SSS is financially losing

Why the SSS is financially losing

Supposedly, the Social Security System stands as a formidable government financial institution immune from the trauma of financial losses.   Conceived to help US President Franklin D. Roosevelt  overcome the Great Depression that saw millions of Americans without work, and many ending up homeless and hungry, the SSS was  thought of as the magic to keep alive free enterprise that was lumbering amid the specter of communism engulfment.

As  a welfare formula, the SSS collected  contributions from the workers with a share from their  employers, although it was wholly designed to benefit them. Being a continuing system of contribution earning modest interest, it was thought to be financially infallible until after it was overtaken by the system of casino economy of investment and inflation caused by the deregulation of  interest rates. 
The Philippines adopted its version with the passage of Republic Act No. 1161.  Under President Quirino, the SSS was enacted to counter the growing communist-led Hukbalahap rebellion.  In 1957,  R.A. No. 1792 was introduced, amending the SSS.  However, it was during the martial law years  of the Marcos administration that significant amendments were introduced.  Among them was  P.D. No.  177 exempting the payment of income taxes on gratuities received by private and government employees, etc.; P.D. No. 347 authorizing the grant of retirement benefits, etc. to members of the SSS; P.D. No. 735 increasing the social security benefits of SSS members; P.D. No. 1013 authorizing the reimbursement for sterilization expenses form  SSS;  and P.D. No. 1368 granting disability and death benefits to members of the SSS under the Employees Compensation Program and the State Insurance Fund.
As public fund, the contributions are deposited for safe-keeping and for the implementation of the law by a government agency created for that purpose.  On that basis, the government has no right to appropriate, use or place the fund at risk through investment even under the pretext that it would rake in more money.
However, that orthodox view changed with the enactment of RA No. 8282 during the Ramos administration, which effectively liberalized the trust funds for investment purposes.  Specifically, Section 26 gave the administrators of the SSS a free hand to invest the trust fund, changing the term to  reserve funds to make palatable their disposition of the money they do not own.
Being a fanatical disciple of neoliberalism, the Ramos administration thought it wise that  investing the funds would be good for the members  without those financial hustlers taking a close hard look that investment has never been a two-way street.  That means  the contributions of the members would be put at risk to possibly deny them  the benefits they hope to avail in case of illness, disability, death, to sustain them in their twilight years, or to share the meager amount to their loved ones.
According to the Ecumenical  Institute for Labor and Research (EILER), the SSS as of 2012 accumulated P350 billion in  contributions.   EILER executive director Anna Leah Escresa said that  SSS administrator, Emilio de Quiros, former vice president of the Ayala–owned Bank of the Philippine Island and vice president of Ayala Life Assurance, Inc.,  has placed significant equity investments in Philex Mining Corp., in PLDT Co., First Holdings Corp., Meralco and Union Bank. SSS also channeled at least P105 billion of pension funds, or 30 percent of the investment reserve fund, to the stock market.
While the SSS  claims to have earned P18 billion from its corporate  investments in the first half of 2013, one could sense contradiction: First  is the  projected sale of the  system’s remaining prime assets,  the   so-called Block 57 in Bonifacio Global City and the 4-hectare prime property in East Ave., Quezon City.  Second is the plan to increase contribution in the wake of the pending bills seeking to increase the monthly pension of retired members.  Senator Ferdinand “Bongbong” Marcos sought to increase the monthly pension form the current range of P1,200 to P2,440 a month to P3,000 to increase by P500 a month until the amount reaches P5,000.
According to Rizaldy Capulong, deputy chief actuary of the SSS, the projected pension fund would run out of money by 2039 if the current proposals are implemented without a corresponding increase in contributions.   The  argument amounts to asking which comes first, the chicken or the egg.  Before that, the members were made to believe the earnings from their  investment  would be  used to as supplement their benefits and monthly pensions without imposing additional burden to the employees and the employers.
Now that the Ramos-sponsored R.A. No. 8282 has run aground,  the demand to hike contribution  is to say the least, an insult.  Even if one would have to set aside the P340 billion reserved funds  that accordingly is  raking in an additional P25 billion a year,  the members haven’t even smelled a whiff of it.  Aside from having failed to fully account for the shares of stock purchased from  Belle Corp. during the time of Ramos, Estrada and Arroyo, reports had it that SSS administrator de Quiroz earned P4.348 million from Belle Corp., while Eliza Bettina Antonino  got P1.244 million from Philex Mining in 2012. 
Even if one does not question the scandalous compensation received by these hustlers representing the interest of the country’s top oligarchs, many say it was illegal and criminal because they are not supposed to receive compensation from a company for which they have they own set of interests to protect.  Besides, they are already receiving generous compensation from the SSS, and for them to receive additional compensation from companies like Philex Mining and from Belle Corp. could  result in conflict of interests.  Their conduct  does not seem to match with their duty  of securing the trust funds from being dissipated.  They cannot even figure out that interest of the system  may not always run parallel to the interest of the corporations where they invested funds not of their own, and their remuneration means nothing less than a bribe for turning their back on interest of the unwary members.

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