This should be of no surprise as SSS is only following the increase of contribution that was scheduled since 2018 as stated via the Republic Act No. 11199 or the Social Security Act of 2018.
With new policies come increased confusion. All people know was that both employers and employees would be paying for more mandated share of benefits come January 2021. But how did the MPF come to be? Was it pre-planned or made because of the government expenses due to COVID-19? What does it mean for the Filipino people, and is the SSS MPF truly the solution Filipinos are searching for to answer their retirement needs?
To make it easier, I have summarized this program, its pros and cons and what it means to both employers and employees into an easy-to-understand post:
- Was the increase of SSS contributions from January 2021 a result of the SSS’ Small Business Wage Program (SBWS)?
- If not the SSS’ Small Business Wage Program (SBWS), why was the SSS Contributions required increased?
- Do you have the 2019 and 2021 SSS Contributions on an Excel File? Short Answer: YES!
- Following the new 2021 SSS contribution table, how much larger should Employers and Employees have to pay in terms of additional contributions?
- What is this SSS Mandatory Provident Fund?
- Who are Covered Under the Mandated Provident Fund?
- How will SSS invest the WISP funds? Is there a guaranteed return on investment (ROI)?
- How much can I earn under the WISP program?
- So who is the biggest contributor/loser under the WISP program
- Do we have a choice NOT to enroll in WISP? What is the penalty for failing to join WISP or SSS’ Mandatory Provident Fund?
- Okay, fine. Thanks for the extra savings. How can I withdraw from WISP during Emergencies?
- If I cannot withdraw my WISP returns early, ultimately, who are the true beneficiaries under WISP?
- In What Manner Can Myself or my Beneficiaries Get my MPF Returns Upon My Death, Disability or Retirement?
Feel free to comment below as well if you have any more questions about the program.
Top 13 Questions Answered on the New SSS Mandatory Provident Fund (AKA WISP) Program
1. Was the increase of SSS contributions from January 2021 a result of the SSS’ Small Business Wage Program (SBWS)?
Nope — The increase was pre-planned pa ever since the Social Security Act of 2018 was approved and signed to law by February 2019. Whether or not COVID-19 happened is irrelevant. Whether or not SBWS happened, the increase would still have happened according to schedule. See Sec. 4. Powers and Duties of the Commission and SSS. – A-9 of the Social Security Act of 2018:
Source: Social Security Act of 2018
This was reiterated by SSS President and CEO Aurora C. Ignacio who said that:
- SSS’ contribution rate would be set at 13 percent from the current 12 percent next year — See above, as per schedule.
- Minimum monthly salary credit (MSC) will be adjusted to P3,000 from the current P2,000, except for Kasambahay and OFW members whose minimum MSC will respectively remain at P1,000 and P8,000 —– See above, as per schedule.
- The maximum MSC will be at P25,000 from P20,000 — See as above, right on schedule.
- The increase of SSS contribution of 1% will be split between employers and employees. So Employer share will increase to 8.5% from 8%, while Employee share will be at 4.5% now instead of 4% — See as above, right on schedule.
2. If not the SSS’ Small Business Wage Program (SBWS), why was the SSS Contributions required increased?
Remember the time President Duterte declared in 2017 he would increase the benefit for all pensioners by Php 1,000 per month, and almost EVERYONE celebrated?
Well, this is one of the big reasons why everyone is paying increased contributions.
There are 2.7 million retirees in the Philippines. Multiply that by Php 1,000 PER MONTH, and the Php 1,000 increase is now costing SSS Php 32.4 Billion per YEAR. The unscheduled increase shortened the SSS life by a considerable 10 years. Hence, in order for SSS not to go bankrupt, the government has to increase everybody else’s contributions to keep the fund afloat.
SSS President and CEO Aurora C. Ignacio admitted this on her press conference last December 23, 2020: “This was why a year later, the Social Security Act of 2018 was enacted. The new law provided, among others, a schedule of increases in contribution rate as well as the minimum and maximum MSCs up to 2025. Upon full implementation, the reforms under it will offset the adverse financial impact of the additional monthly benefit granted in 2017.”
See how the 2017 increase of pension payment was reflected onto the 2018 SSS Act:
SSS must survive. Otherwise, why should I paying contributions today for my money just to go fund the senior citizens who I’m not even related to? Here are the SSS notices of increase in contributions in 2021:
Hence, everyone else must grit and pay more so that there will be enough money for everyone to enjoy the benefits for the future to perpetuity.
In short, SSS is now increasing their contributions so that it can survive.
At its essence, it is the young and employed, funding the old and retired:
Hence, the next time any government official declares an increased of SSS benefits, please do NOT rejoice. Lahat ng perang lalabas, may pinagkukunan din niyan.
Historically, from 1980 to 2016, the contribution rate was increased only four times, while pensions were increased 22 times. So long as we do not stop increasing the amount of money we pay our pensioners, those who are working and still contributing to the fund will continue to pay, like a legalized Ponzi scheme.
3. Do you have the 2019 and 2021 SSS Contributions on an Excel File?
Yup, here is the free downloadable version of both the SSS Contribution Table 2021 (TinainManila.com):
The original version can be found in SSS Circular 2020-033: New Schedule of SSS Contributions Effective January 2021, which was published last December 7, 2020:
4. Following the new 2021 SSS contribution table, how much larger should Employers and Employees have to pay in terms of additional contributions?
To be honest, the amount is NOT THAT BIG if you are earning up to Php 20,000. Here for example is the contribution if you’re at the lowest range of the SSS Contribution Table:
As you can see on my Excel table below, the increase only ranges from an additional Php 15.00 to Php 100.00 per month for Employees, and an additional Php 30.00 to Php 200.00 for Employers.
At minimum wage of Php 14,000 for example, you used to pay only Php 560.00 in terms of EE contributions in 2019 and 2020. Now, you will have to pay Php 630.00 of EE share per month. That’s around a Php 70.00 extra increase per month, which buys you a one-piece chicken with rice at Mini Stop:
That’s not a lot. McDonalds has increased more for its order of coke than what SSS is asking us for.
The caveat is when your salary goes higher than Php 20,000.
This is the new 2021 SSS Contribution Table. Please note that we will most likely follow this table for the year of 2021 and 2022:
This was the old 2019/2020 SSS Contribution Table.
As you can see, the big difference of contributions lay on the extra Mandatory Provident Fund that SSS is charging employees earning more than Php 20,000 where SSS is now requiring Employers and Employees to pay up to a total of Php 850.00 EXTRA contributions na mapupunta sa Mandated Provident Fund. Now, that’s quite a bit of money:
Kaya if Php 20,000 ang sahod mo and your company approves your increase of basic pay to Php 20,500.00, 1/3 of the extra increase will just go to SSS on their forced savings fund. Boo hoo!
5. What is this SSS Mandatory Provident Fund?
Do you know the concept of “Forced Savings?”
According to the SSS, the mandated WISP boasts of the following features:
- Safe, convenient and tax-free individual retirement savings plan
- Because of the increased employer share, such forced savings plan enjoys a faster buildup
- Allegedly professionally managed with skill, care, prudence, and diligence, and designed to prioritize principal preservation
In short, aside from the pension fund that the regular SSS program provides, WISP is a double up forced retirement fund for those people earning above Php 20,000.
6. Who are Covered Under the Mandated Provident Fund?
Those who are covered under WISP are all private-sector employees, self-employed individuals, OFW, and voluntary members who have no final claim to the regular SSS program and have a monthly salary credit of over Php 20,000.
Membership of WISP starts on the date of first posted contribution.
Those highlighted in YELLOW are those who are automatically mandated to join the WISP program:
Contributions in WISP shall be paid together with contributions in the regular SSS program.
There are ZERO changes in how things are done. You still use the PRN for payment. PRN will reflect both the regular contributions and the MPF part. It’s non-taxable.
7. How will SSS invest the WISP funds? Is there a guaranteed return on investment (ROI)?
While there is still not enough information about the content of WISP and how it is invested, SSS said that at least 75% of WISP will be invested in risk-free government securities, while a “modest” portion or around 10% to 20% will be invested in blue chip corporations. These are the example of some blue chip corporations in the Philippines:
Regardless of returns, SSS will at least guarantee your principal, which is the money both employer and employee put in.
If it is indeed 4.5% ROI, that’s not high. It’s only high enough to combat the average Philippine inflation, if ever. See Philippine inflation rate from 1985 to 2025. Our current inflation rate for 2020 by the way is between 2.5% to 3.3%.
It is however a win-win for SSS.
Using the money from the WISP program, SSS has a steady inflow of income that they can use to make money off the markets and the SSS members. It will be enough to sustain survivability for many more years kasi they have this cash cow giving them money year after year as more employed people join the work force: They can always use the money to lend out to SSS members, and charge a 10% annual interest on Salary Loan, 6% annual interest on Calamity Loans, and earn 1% profit for every delinquent loan month. If SSS officials do not mismanage the funds, SSS can enjoy survivability up until my grandchild is born
Ms. Eliza was appointed SSS Commissioner in 2010 at the age of 30 years old after serving as Mar Roxas’ Chief of Staff. Her crowning achievement, which by the way is truly a great achievement is being the Managing Director of Moment Group, who owns the following BRANDS of restaurants:
I will leave you her biodata which is published publicly to show whether she is capable as a commissioner of the SSS and whether she deserved her Php 5.99 million salary in 2014. That’s allegedly a monthly salary of Php 499,167!!!
Official COA reports also showed that Antonino, as SSS commissioner, earned P1.3 million in 2011; P1.244 million in 2012; P2.373 million in 2013; and P5.997 million in 2014, for a total of Php 10.914 million paid to her so far.
Given that majority of her credentials was to run restaurants, which she does very well by the way, I personally believe that Eliza Antonio was not the best person to be an SSS Commissioner given the SSS’ mandate. However, given her close professional relationship with Mar Roxas, it is no wonder she was appointed.
Anyway, Sir Mar lost his presidential bid in 2016 and Ms. Antonio returned to the private sector, so nakalimutan na ng mga Pinoy yung nangyari. Anyway, such type of unfair nepotism that sometimes lies in government offices is one of the reasons why SSS would need our money to survive.
8. How much can I earn under the SSS WISP program?
Personally, I do NOT think 4.5% is that impressive — The Pag-IBIG MP2 Fund can earn me around 6.98% per annum, and only has a shelf life of 5 years per investment.
According to SSS Circular No. 2020-32-B, investment earnings will be distributed proportionately based on members’ MPF contributions. MPF contributions is defined as the total members’ contributions and their earnings in the member’s accounts.
Now, assuming that you earn Php 25,000.00 and your employer pays you an MPF of Php 525.00 to your Php 325.00 for a total of Php 850.00 per month. Assuming that this contribution will be constant (which it won’t as this will increase as the years go on), and assuming that the rate of return is 4.5% per year.
As you can see, after depositing Php 20,400.00 of total MPF contributions in 2 years, the fund will only profit you a measly Php 984.32 if it earned 4.5% interest per year. Kulang pa ng pambayad ng isang bedspace.
However, a different perspective gives us a bit of hope. Let’s look at it when the chart is seen on a 1-year basis — When an employee deposits Php 3,900.00 into the SSS MPF program, their employer tops up the money with Php 6,300.00, which results to a larger retirement fund for the employee. And while the government only pays you an extra Php 252.08 of interest, the retirement still grows into Php 10,452.08, which is 2.68x the money that the employee ever gives in!
9. So who is the biggest contributor/loser under the WISP program?
At the end of the day, the additional contributions punish the employers, who are the biggest contributors to the program. Here’s a pie chart for you to see who truly contributes to the MPF program assuming a salary of Php 24,750.00 and up:
As you can see from the chart, while WISP was made so that SSS will have reliable, steady money inflowing per year which employees cannot withdraw at any given time, the bulk of the “investment” per se comes from the employers, and not the employees or SSS.
In a way, WISP masks the fact that the money inflowing via the REGULAR SSS Program is insufficient, so WISP is another way for SSS to ask employers to pay ALMOST DOUBLE the SSS mandated share of ER benefits.
Whereas in 2019, employers are required to pay Php 1,600.00 as employer share of benefits, they are now asked to pay Php 525.00 MORE, for a total of Php 2,125.00 for their employer share of contribution and employee’s MPF assuming that the staff earns Php 25,000.
Add that to the increase of Philhealth coverage to 3.5%, and Pag-ibig ER share of contribution, an employer’s share of mandated benefits that they need to pay now rises up to Php 2,662.50 — which is now more than 10% of the staff’s Php 25,000.00 salary!
SSS only used to ask employers to pony up Php 1,600.00 max as part of their ER share of SSS contributions (Est 6.4% at Php 25,000 income). However, now, via WISP, the TOTAL employer share of benefits has now ballooned to Php 2,125, which is 8.5% of income and is a whopping 32.8% increase in the amount of money needed to pay out.
Hence, I advise employers have to use the additional benefit burden into their equation when it comes to giving bonuses and pay increases.
If you’re going to increase your staff’s salary by Php 500 to Php 1,000 next year, just keep in mind that you are paying more than expected, and a big part of that salary increase would mostly go to the payment of government mandated benefits. Boo hoo!
10. Do we have a choice NOT to enroll in WISP? What is the penalty for failing to join WISP or SSS’ Mandatory Provident Fund?
We do not having the choice on whether we want to join WISP or the SSS Mandatory Provident Fund.
All private-sector employees, self-employed individuals, OFW, and voluntary members who have no final claim to the regular SSS program and have a monthly salary credit of over Php 20,000 must take part in WISP or SSS’ Mandatory Provident Fund. Hence, the very definition of “mandatory” explains that you don’t really have a choice.
If you should be covered but do not contribute to WISP, the penalty will be 2% per month from the date the contributions are due, with both employer and employee sharing the penalty (SSS Circular No. 2020-32-B).
11. Okay, fine. Thanks for the extra savings – How Can I withdraw from WISP during Emergencies?
Here’s the sad part — SSS has already warned everyone that they CANNOT withdraw their contributions or its earnings early. This means that SSS members can only withdraw the value of their WISP at the time of:
Retirement: WISP will be the additional benefit to add to your existing pension benefits, or
Total Disability: When you get seriously injured, you cannot work anymore, or
All claims under WISP shall be paid together with the SSS regular benefit. Basis for the benefit is the member’s total accumulated value (AV) at the time of the approved claim.
Thanks SSS! This is very comforting to know.
In a way, this is good as such clause forces Filipinos to truly save for their retirement because they can never withdraw their money until their death, retirement, or total disability, whichever comes first.
12. If I cannot withdraw my WISP returns early, ultimately, who are the true beneficiaries under WISP?
If you are still alive and retired or totally disabled, you can withdraw the benefits. For most Filipinos, this is what we will look like when we get back the returns of our Mandated Provident Fund:
If we die before then, your beneficiaries that you listed down for your SSS will be able to withdraw the fruits of your decades of forced savings under WISP.
The beneficiaries of WISP are then the same primary or secondary beneficiaries that you put in under the regular SSS program.
In addition to your monthly pension, SSS will pay the lump sum to your eligible beneficiaries when you die. The amount will paid as a lump sum, which consists of the remaining balance in the member’s accumulated AV in addition to the regular SSS monthly pension.
In short, if you don’t live until 60 or 65 years old, you will not see a peso of your WISP. Pamana mo na lang po ang WISP sa mga beneficiaries mo.
But hey, at least, it’s tax free. 🙂
13. In What Manner Can Myself or my Beneficiaries Get my MPF Returns Upon My Death, Disability or Retirement?
SSS has declared that earnings realized through years of WISP contributions will be distributed proportionately based on the member’s contribution, when they retire, become totally disabled or are dead.
The total accumulated account value (AV) of the member under the WISP will be the basis of his/her additional benefits. Benefits will be given in annuity or lump sum, depending on the manner of payment of his/her benefit under the regular SSS program.Source: Circular No. 2020-32-B, Amendments to the Guidelines for the Implementation of the SSS MPF Program
The annuity will be given in the form of a fixed amount monthly pension, to be paid until the member’s AV is fully settled, covering at least 15 years.
Upon the death of a WISP pensioner, any remaining balance in the accumulated AV will be paid to his/her beneficiary in lump sum.
So how do I personally feel about the new SSS Mandatory Provident Fund? Does it really bring people more benefits?
It is a NO because the MPF is somewhat like a glorified Ponzi scheme that will ensure that SSS will have more than enough money to hide their screw-ups (*cough, Mar, cough), and still survive until we get to our senior years.
It is a NO because it places majority of the burden on Employers — Topped with a steady increase of minimum wage, cost of permits, and taxes through the years, adding a few thousands more in the payment of ER share of government mandated benefits adds up. It is truly NOT cheap to do business in the Philippines. There are a lot of hidden costs businessmen need to consider when opening a business here.
It is a NO because I can get a better return elsewhere than the 4.5% per annum SSS promises.
But there is an upside….
It’s a YES because it forces Employers to help Employees with their retirement fund. That aside from the regular SSS pension fund, there is an additional guaranteed fund set aside for employees earning Php 20,000 and above when they retire, die or are removed from the workforce.
It is a YES because Employees cannot loan or withdraw from their MPF at will, thus ensuring longevity of the fund itself. Alam naman natin ang disiplina ng Pinoy — if may paraan kumuha, kukuha. And there will be nothing left for retirement.
It is a YES because it’s an incentive for Filipinos to join the FORMAL WORKFORCE and earn a salary above Php 20,000. While short-term wise, it may result to less take-home pay, the top up from employers are truly the icing on the cake, and will quickly build up Filipinos retirement funds significantly faster than if left by themselves.
It is also a YES because no matter how relatively low the returns are, the principal is guaranteed so there is money back naman kahit papaano.
At the end of the day, we do not have a choice.
The new 2021 SSS Contribution Table has been announced, and everyone who is covered MUST PAY. The Court of Appeals have already CA affirmed its RTC ruling and has held that the payment of SSS contributions is mandatory and its non–payment results in criminal prosecution. The appellate court stated that every criminal liability carries with it civil liability.
So it’s here. We have no choice. And everyone must pay. And pay we will.
And let us just tap our shoulders in an attempt to appease ourselves that this is ultimately for our good, when in fact, we do all this for the survivability of the SSS Fund who is quickly running out of money. And even if we do not see the money, at least we can comfort ourselves in knowing our children will, so I hope everyone will also keep their family affairs in order para hindi mag-away away ang mga beneficiaries natin pag dating sa araw ng pagkuha ng retirement benefits sa SSS.
Have a great week ahead!