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Expanded maternity leave to cut SSS actuarial life by 1 year

By Joann Villanueva

March 25, 2019, 9:12 pm

MANILA -- The Expanded Maternity Leave law is estimated to shorten the Social Security System’s (SSS) fund life by one year if a contribution hike is not imposed to correct this situation.

The law, which took effect this month, is projected to increase SSS’ maternity benefit disbursements from about PHP6 billion in 2017 to about PHP13.5 billion this year.

SSS Acting President and Chief Executive Officer (CEO) Aurora Cruz-Ignacio, in a briefing Monday, said the amended SSS Charter does not include the contribution hike for maternity benefits.

“We will have to source the fund from other sources within the Social Security fund,” she said.

Under Republic Act (RA) 11199, otherwise known as the Social Security Act of 2018, the state-pension fund for workers in the private sector may increase contributions by one percentage point every other year from the current 11 percent to 15 percent by 2025 without the approval of the President.

This is targeted to increase the pension fund’s actuarial life by 13 years from 2032 to 2045 or upon the full implementation of the law on 2025.

However, the Expanded Maternity Leave law, which SSS is mandated to implement, is seen to reduce this by a year without the additional contribution.

Under the law, pregnant workers will have 105 days of paid maternity leave, 7 days of which are transferable to fathers. It does not discriminate whether the pregnancy already exceeded four pregnancies.

It gives single mothers additional 15 days leave while a 30-day extension can be made but this will no longer be paid.

Of the 11 percent combined contribution of both the members and their employers, only 0.4 percent is allocated for maternity benefit to date.

An informal study conducted by the SSS in 2015 showed that share of contributions for maternity compensation should be increased to 0.5 percent, or even to 0.6 percent to offset contribution deficiencies.

SSS Senior Vice President for Actuarial and Risk Management Group Edgar B. Cruz, during the same briefing, said the impact of the increase in maternity benefits is smaller compared to pension hikes, since the latter is seen to lessen SSS’ actuarial life by 10 years.

He, however, noted that since the law does not mention any increase in contribution to pay for maternity benefits, a big question mark hangs over them.

Asked how long the agency’s funds can absorb the increase of maternity benefit disbursements, Cruz cited that “as an actuary I’m not comfortable whenever we give out benefits without source of funding.”

He, however, pointed out that they are mandated by law to give out this particular benefit, thus, they will do everything they can to fund it.

“We estimated that without additional funding it will set back our fund life by an additional year,” he added. (PNA)

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