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Judul : Understanding the SSS Contribution Table and why you should not depend only on SSS for your retirementLink : Understanding the SSS Contribution Table and why you should not depend only on SSS for your retirement
Just recently I saw a Facebook update from Philippine Social Security System on the pension (or retirement) benefits one can avail for a certain amount of SSS contribution.
The amount shocked me that it lead me to investigate further the math (or computation) behind the said values.
As part of our Global Campaign for Financial Literacy, it is very important to understand what benefits we are getting for what our money is paying for. Thus, today, let us dissect and understand the SSS contribution table (as of 2017) and learn why we should not depend only on SSS for our retirement.
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| We should not only depend on our SSS for our retirement |
This is the image uploaded by the Philippine Social Security System (SSS) in their official Facebook Account:
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| SSS Contribution and Benefits (source: SSS Facebook Page) |
Now looking into the values:
Juan contributed every month 110.
Every year that's 1,320.
Thus, for the next 20 years of contribution that would be 26,400.
While Pedro contributed every month 1,760.
Every year that's 21,120.
Thus, for the next 20 years of contribution that would be 422,400.
Thus, Pedro contributed 16x more than Juan.
Now, before we proceed with the shocking part, let's us understand first the SSS contribution table (data as of 2017).
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| SSS Contribution Table 2017 (source: www.sss.gov.ph) |
For a Range of Compensation (monthly salary) there is an equivalent fixed Monthly Salary Credit.
The current SSS contribution rate is 11% of the monthly salary credit not exceeding P16,000 and this is being shared by the employer (7.37%) and the employee (3.63%).
Self-employed and voluntary members pay the 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 P5,000.
For the non-working spouse, the contribution will be based on 50% of the working spouse's last posted monthly salary credit but in no case shall it be lower than P1,000.
Source: www.sss.gov.ph
Now, going back to the above image, after 20 years of contribution, both Pedro and Juan applied for retirement and will be receiving the following pension benefits:
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Understanding the SSS Contribution Table and why you should not depend only on SSS for your retirement
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