Last week, I received a letter from SSS about this blog post, entitled, “For SSS Pension Plan: Should I pay the Maximum or the Minimum SSS Contribution?”, which I published on March 21, 2015. It was so nice of them to reach out to me to clarify some items and to give me additional info regarding this matter.
But before that, I saw how this post became trending and record-breaking and how it brought my site’s performance to the top. I also received a lot of feedback and comments (both positive and negative) from different people who had the same question and who wanted to know the best answer.
Unfortunately, some of my readers got confused with my take on this question, but I thank all of you for your feedback and questions because it allowed me to research even more and update that blog post with more accurate answers backed by the Social Security System of the Philippines.
I asked them if I can share their letter on this site (www.pinayinvestor.com) and thankfully they approved it. It was addressed to me: Pinay Investor, and it was written by the Vice President of Public Affairs and Special Events Division, Marissu G. Bugante, but the one who emailed me was Ma. Luisa “Louie” Sebastian, Assistant Vice President of the Media Affairs Department, SSS Philippines.
Below are the contents of the letter:
Relevant Policies regarding SSS Pension / Retirement Plan:
- The computation of SSS pensions as provided by the Social Security law is based on a member’s number of contributions as well as the amount of contributions paid. The SSS computes pensions based on the average of all contributions paid by the member from the date of coverage or the average of contributions for the last five years; whichever yields the higher amount is used for the computation.
- The monthly contribution of a member is based on actual compensation for an employed member or the declared earnings for a self-employed/voluntary/OFW member. Changes in the Monthly Salary Credit (MSC) are governed by policies to avoid anti-selection such as undue jacking up of contributions prior to a contingency such as retirement.
- A self-employed or voluntary member (including an OFW and non-working spouse), who is 55 years old and above, can only increase his/her MSC only once in a given calendar year and by one salary bracket only from the last posted MSC, except if:
- He/she is changing membership type from employed/self-employed to voluntary or OFW for the first time; and
- There is a higher maximum MSC under a new Schedule of Contributions, provided that he/she was paying at the maximum MSC under the immediately preceding Schedule of Contributions. Any change thereafter will be governed by existing rules.
Please refer to the SSS Circular No. 2015-007 (below) which governs changes in policies on SE/VM/OFW/NWS Contributions (Annex A).
- With reference to the illustration you showed in your blog site, since Patrick and Kevin are employed members, the basis of their contributions/MSC is their actual compensation so it is not possible for them to just choose any MSC or change to a higher MSC.
- But if Patrick and Kevin are self-employed or voluntary members, you may refer to the matrix on the next page to illustrate the SSS pension computation of Patrick and Kevin:
- The example cited above should be analyzed not only in consideration of one’s retirement benefit but also under the whole range of benefits provided by SSS: sickness, maternity, death disability and retirement. Using the given example where both Patrick and Kevin started paying SSS Contributions at the same time, the following are possible scenarios.
Thank you very much Ms. Louie and SSS Philippines for allowing me to post your letter on my website. I’m excited for more of our future partnerships.
And thank you to all my readers for your continued trust and support. I hope you found this information helpful and I hope all your questions and concerns have been addressed by SSS on this post. For other SSS concerns, you may email their Member Relations Department at firstname.lastname@example.org.
You may also send your questions to me privately or through the comment section below and I will try my best to send it to them and hopefully we hear from them as soon as possible.