13 Things You May Not Know About The SSS Fund

13 Things You May Not Know About The SSS Fund

Nearly every working Filipino in the private sector contributes monthly into the SSS or the Social Security System fund, but not everyone understands the benefits they qualify for, nor how the system works. To provide a generalized view of the SSS, here are 13 things every member should know:

SSS Logo

What exactly is the SSS?

It is an insurance program mandated by the Philippine government to cover all income earners or workers in the private sector, in contrast, government workers are covered by the GSIS or Government Service Insurance System.

What’s the source of its money?

The SSS basically derives its funds from member’s contributions and investment earnings. Such portion of the contributions that are not needed for benefit disbursements go to a Reserve Fund, which is intended to cover future liabilities in benefit payments of the SSS to its over 29 million members to date.

How much of my income should go to the SSS?

Your monthly contribution is based on your compensation. The current SSS contribution rate is 11% of the monthly salary credit not exceeding ₱16,000 and this is shared by the employer (7.37%) and the employee (3.63%).

For instance:

If your monthly salary is ₱30,000, your contribution will only be based on ₱16,000 (which is the highest monthly salary credit). You shall then pay the amount of ₱581.30, while your employer will pay ₱1,208.70, for a total contribution of ₱1,790.00 per month.

For self-employed and voluntary members, the contribution rate is 11% of the monthly salary credit (MSC) based on the monthly earnings declared at the time of registration. For OFWs, the minimum monthly salary credit is pegged at ₱5,000. Meanwhile, non-working spouses’ monthly contribution is based on 50% of the working spouse’s last posted monthly salary credit but in no case shall it be lower than ₱1,000.

how to start

How is my retirement benefit computed?

To compute your monthly pension, the SSS uses the values of three formulas. So if you are a member who has a monthly salary of ₱30,000.00, and who decides to retire at age 60 with a total of 30 years’ worth of contributions, you may be qualified to a monthly pension based on whichever amount is higher based on the following calculations:

Example:  Average total contribution is ₱1,790.00 x 30 years x 12 months = ₱644,400.00.

1. The sum of ₱300 plus 20% of the average monthly salary credit plus 2% of the average monthly salary credit for each credited year of service (CYS) in excess of ten years;

Pension: (AMSC) 20% + (AMSC) 2% for year of service in excess of 10 years + ₱300

: (₱16,000*20%) + (₱16,000*2%*20 years) + ₱300

: ₱3,200 + ₱6,400 + ₱300

: ₱9,900.00

2. Forty (40) percent of the average monthly salary credit:

Pension: (AMSC) 40%

: (₱16,000*40%)

: ₱6,400.00

3. ₱1,200, if the CYS is at least 10 but less than 20; or ₱2,400, if the CYS is 20 or more.  

Pension: ₱2,400.00 since you have more than 20 CYS

Accordingly, the highest value yielded by any of the formulas, which in this case is ₱9,900.00, shall be your monthly pension upon retirement.

It is important to note that members only receive the lifetime pension support if they have contributed for at least 120 months or 10 years, otherwise a lump sum amount equivalent to the member’s total contribution plus some interest will be given.

Is there an option to get an advance from my retiree benefits once I retire?

Yes, but it can be exercised only when filing the first retirement claim. Basically, you, as a retiree-member, have the option to receive your first 18 months’ pension paid out in lump sum, but discounted at a preferential rate of interest to be determined by the SSS. You shall then thereafter start receiving your pension on the 19th month, and every month thereafter.

Who are under the compulsory coverage of the SSS?

Compulsory coverage is the mandatory registration of employees, employers and self-employed persons with the SSS, with corresponding payment and remittance of social security contributions. To be specific, they are the following:

Employer (ER) An ER is any person who uses and pays for the services of another person in any business, trade, industry, or undertaking.
Employee (EE) An EE could be:

  • a worker in the private sector, regardless of status of employment, whether permanent, temporary, or provisional, who is not over 60 years of age (up to 60th birthday, if initial coverage);
  • a house helper who is not over 60 years of age (up to 60th birthday, if initial coverage);
  • a Filipino seafarer, upon signing of the standard employment contract and actual deployment by the manning agency and the foreign principal, who are considered as the ERs; or
  • a worker of a foreign government or international organization, or its wholly-owned instrumentalities, with an approved Administrative Agreement with the SSS.
Self-Employed (SE) An SE is an individual who is:

  • engaged in any trade, business or occupation, who has no ER other than himself,
  • derives an income of at least ₱1,000 a month from his/her physical and mental efforts, and
  • not over 60 years of age (if initial coverage).

What is voluntary coverage?

Voluntary coverage is the non-mandatory registration and payment of social security contributions by any of the following:

Voluntary Member (VM) A VM is one:

  • who was previously covered as an SSS member either as an EE, SE, or OFW;
  • has at least one (1) posted contribution;
  • is no longer engaged or working as either an EE, SE, OFW, or has no income/earnings as such for a given period; and
  • opts to continue paying contributions on a voluntary basis to maintain his/her right to full SSS benefits.
Overseas Filipino Worker (OFW) An OFW is any of the following types of overseas-based Filipino:

  • recruited in the Philippines by foreign-based ERs for employment abroad;
  • having a source of income in a foreign country; or
  • residing permanently in a foreign country.
Non-Working Spouse (NWS) An NWS is a married person who devotes full time in the management of the household and family affairs, unless he/she is engaged in other vocation or employment that is subject to mandatory coverage.

When does coverage of members take effect?

It depends on the type of SSS membership.

ER On the first day he/she hires the first EE(s).
EE On the first day of his/her employment.
SE On the month and year of first monthly contribution payment, provided that it is not earlier than the declared “Start of Business” in the SSS Form E-1; or retroactive on the applicable month and year of the first contribution payment.
OFW On the applicable month and year of the first contribution payment based on the payment deadline for OFWs.
NWS On the applicable month and year of the first contribution payment.

What are the types of SSS benefits?

The benefits under the Social Security Program are:

  • Sickness Benefit. It’s a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury.
  • Maternity Benefit. It’s a daily cash allowance granted to a female member who is unable to work due to childbirth or miscarriage.
  • Disability Benefit. It’s a cash benefit granted – either as a monthly pension or a lump-sum amount – to a member who becomes permanently disabled, either partially or totally.
  • Retirement Benefit. It’s a cash benefit granted – either as a monthly compensation or a lump-sum amount – to a member who can no longer work due to old age.
  • Death. It’s a cash benefit granted – either as a monthly compensation or lump-sum amount – to the beneficiaries of a deceased member.
  • Funeral. A funeral grant of ₱20,000 to whoever paid for the burial expenses of the deceased member.
  • Salary Loan. It’s a cash loan granted to an employed, currently – paying self-employed or voluntary member. It is intended to meet the member’s short-term credit needs.

Can a member withdraw membership with the SSS?

No. When a person registers and is covered for SSS membership, he/she becomes a member for life.

If I lose my SSS card or forget my SSS number, should I secure another number?

No. The SSS number assigned to a member is a lifetime number and must always be used in all transactions with the SSS. If the member wishes to replace a lost SSS ID card or cannot remember his/her SSS number, it is advisable to inquire from the nearest SSS branch.

primary beneficiaries

Who are considered as my primary beneficiaries?

Your primary beneficiaries are your legitimate dependent spouse until he or she remarries, and your dependent children – whether legitimated or legally adopted, or illegitimate, who are not yet 21 years old.

If you’re single and without children, the benefits will go to your parents who are considered as your secondary beneficiaries.

In the absence of both primary and secondary beneficiaries, any other person that you designate in your SSS records shall be considered as the beneficiary.

What if I lose my job?

Upon separation from employment, your employer’s obligation to pay your SSS contributions ceases at the end of the month of separation. However, you shall still be credited with all the contributions paid on your behalf and remain entitled to SSS benefits and privileges. You may also opt to continue paying the total contributions as a voluntary member to maintain your right to full benefits.

There you have it, a rundown of some of the most important things to know about the SSS. Keep in mind that being aware of your obligations and benefits under the program will give you advantage in times of need. This article is far from exhaustive though, so it will be best to check out the official site of the SSS from time to time.

Aside from a salary loan, the SSS also provides its members the benefit of getting a home loan. If you’re looking to purchase a property and considering taking a loan, you can read this article to compare the differences between a Commercial Bank, SSS, and Pag-IBIG housing loans.

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