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Thursday, January 14, 2016


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President Benigno Aquino III has thumbed down House Bill 5842 which provides for a P2,000 ($41.85)-hike in the monthly pension of Social Security System (SSS) members, Malacañang announced on Thursday, January 14.

In his veto message sent to Senate President Franklin Drilon and Speaker Feliciano Belmonte Jr dated January 12, the President said while he understands the objective of the proposed measure, it would have "dire financial consequences" for the entire SSS membership in the long run.
"While we recognize the objective of the bill to promote the well-being of the country's private sector retirees, we cannot support the bill in its present form because of its dire financial consequences," Aquino said.
"A Two Thousand Peso (P2,000) across-the-board pension increase with a corresponding adjustment of the minimum monthly pension will result in substantial negative income for the Social Security System," he added.
The President explained that the proposed pension increase per retiree, multiplied by the more than two million pensioners, is equivalent to a total payout of P56 billion ($1.17 billion) per year.
He said that against the annual SSS investment income of P30 billion ($627.85 million) to P40 billion ($837.14 million), the total payout for pensioners under the measure would result in a deficit of P16 billion ($334.86 million) to P26 billion ($544.15 million) annually.
Aquino added that given the projected deficit, the SSS "will be constrained to draw from and use its Investment Reserve Fund (IRF) to support the pension increase. Consequently, the IRF will diminish over the years, eventually reaching zero by the year 2029."
"The stability of the entire benefit system, whose present membership comprises about 31 million individuals, will be seriously compromised in favor of two (2) million pensioners and their dependents. In view of these considerations, I am constrained to veto the abovementioned enrolled bill," he said.

The House of Representatives passed HB 5842 on third and final reading in June last year; the Senate adopted it in toto in November 9. The bill was transmitted to Malacañang for the President's signature in mid-December.
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