Here’s How the New SSS Contribution Rates Will Lower Your Take-Home Pay
Employees will start receiving less take-home pay by May this year.
The Philippine Social Security System (SSS) released the new contribution schedule following President Rodrigo Duterte’s signing of the Republic Act No. 11199 in February, also known as the Social Security Act of 2018. The new contribution schedule will take effect on April and will be payable in May.
Members of the Social Security Commission are now allowed to implement rate adjustments under the new law. Starting this year, the governing board will increase the contribution rates by one percent every two years until 2025. Only the president had such power prior to the passage of the law.
The rate increases have a direct effect on the amount of money employees receive after the deduction of taxes and other obligations.
Compared to the contribution schedule used previously, employees will see a decrease in their take-home pay from a minimum of P20 a month to a maximum of P640—depending on the compensation range—starting May this year. That’s equivalent to increased annual deductions of P240 to P7,680.
The infographic above shows how much take-home pay will be going to the SSS once the new schedule is implemented. Only selected compensation ranges are shown in the table, but the full schedule can be found here. While the amounts increased, the proportion shouldered by the employers remains at 68 percent and the employees at 32 percent.
The top monthly salary credit—or the maximum benchmark used in the calculating how much the social security contributions should be for employees based on their salaries—was also increased from P16,000 to P20,000. This requires higher contributions for those who earn more than P15,750.
Previously, those who earned a monthly salary of P15,750 and, say, P150,000 a month paid a fixed contribution of P1,790 monthly. With the new schedule, the maximum compensation range was changed to P19,750 and above. They will be paying P2,430 for SSS contributions every month.
The actuarial life of the SSS will extend up to 2045 with the implementation of higher contribution rates. It is also expected to mitigate the effects caused by Duterte’s approval of the Php1,000 pension hike for SSS retirees in 2017, which was said to have slashed the pension fund’s life by 10 years.