Social Adequacy and Economic Effects of Social Security: The Philippine Case

OF _L

Fx_'¢_._:

_IO

THE __E

B. L4WBERTE_

STAFF PAPER SERIES NO, 85-09

Research Fellow, Philippine Institute for Development Studies (PIDS). The author is qrateful to Ms. Evangeline Yu for her able research assistance and Ms. Juanita E. Tolentinc for word processing assistance, and Ms. Lilia Q. Santiago for her edit0rial assistance.

of

and

A paper prepared for the ASEAN Economic Associations

10th Conference of the Federa_ Singapore, 5-7 November 1985.

The views expressed in this paper are do not necessarily reflect those of the

ÂŁhose of the Institute.

aut_c_.,

TABLE

OF

CONTENTS

Sect ion

I.

Page

Introduction

II.

The

III.

Need

Legal

IV.

1

for

Social

Framework

Security

and

Objectives

5_;:ial

_ecui'ity

System

Social

Adequacy

of

Security

Program

of

4

the X3

the

Social

System

16

A.

Coverage

16

B.

Benefits

21

C.

Financing

the

Social

Security

System

Vo

Economic

44

Effects

of

Social

Security

A.

Social

Security

and

Saving

B.

Social

Security

and

Labor

C.

Social

Security

and

In.me

vI.

Summary,

Conclusions

and

55 55

Supply

64

Distrihmtion

PDiicy

Implications

References

Appei_dix

Appendix

80

87

I

II

Computation for _ _ for Retirement Historical

Honthlv

Hig_ights

=_r._ion 88

of

GSIS

and

sSS Appendix

74

III

Rate of Retu_ of GSIS and

91 on the SSS

Reserve

Funds 104

I.

The

social

institutions social in

INTRODUCTION

security

system

transferred

security

1937,

two

program years

to

is one

the

of

those

Philippines.

in

the

Philippines

after

the

U.S.

Western

The

started

formally

first

operating

instituted

her

i_/ own

social

security

However, vastly or of

the

differed

from

any

early

have

system

widened

and benefits

rapidly importance society,

economic

social both to

with

security

early

American

security

system.

to the

the demands

environments. have

been

security

system

system

A

number

Philippine of

the

Coverage

has

and

individual

members,

cannot

system

social changing

has

been

increased.

in membership

in general,

social

the

introduced

to cope

and

from

soci_!

been

social

The

Philippine

in substance European

changes

security

program.

been

financial

therefore

growing

quite

resources.

in particular,

Its and

to

be understated.

i_/ It should be noted that the Philippines was still under the American occupation during this time. The quickness of the transfer of such institution is therefore understandable.

- Z -

The the

social

hazards

It

also

as

redistribution

of

thefinanclal

government

attain

only

its

up

large

called

to aid

and

sqcial

goals

has

This

paper

examines

of

It

should

two

social

and

the

on

social

one the

efforts

adequacy

and

Section for

and

Ill

presents

system

slowly

for

a

economic

II

against

security

having the

System

one

in the

the are

Because also

certain

of been

Indeed,

the

economic

for

Philippines.

Philippines.

the government

study

of

systems

of

and

will

program.

legal

analysis

the

the

has seQtor

This

as a whole,

security and

economic

Philippines

sector,

of both

and

the

the

to a discussion

objectives

has

of

has

of

that

system

a social

funds

benefits

adequacy

comparative

is devoted

such

explored.

outset

effects

example,

in attaining

security

at

program

corporations.

the private

social

for

of benefits

system

thesocial

systems,

death

Investible

dependents速

the

been

the

and

against

funotlons,

system

For

five

security

at

security

minimal

social

the

be noted

another

focuses

of

of

distressed

use

age

population

resources,

potential

effects

its

its objectives.

to a maximum

old

auQme_ting

Lately, the

protection

other

and

help

financial

upon

performs

system. to

provides

sickness,

of income

modified

given

system

of disability,

members.

been

security

only social

be made.

arguments Section

framework

Thesoclal

of

adequacy

-

Of

social

security

analyzes

the

The

section

last

economic

is

3 -

examined effects

concludes

the

in of

Section

the

study,

social

IV.

Section

security

sysÂŁem. i

V

If.

This a

THE

NEED

section

social

for

are

numerou_;j

few,

Dut

The

to

that

be

of

accords

program,

both

against

the

between taste. distort

such

intervention

the

using

Samuel

Consider is

a

U

son _s

individuals working

period. All

This

The

individuals (0 z ,

c_ t

to

( 1958 ) who

period; economy

c _) , where second

can,

does have

the and

of

be

the

second have

More

result

in

a_

resources

in

the

proven

to

is

capital

consumption,

period

retirement

goods.

period and

by

model.

a

preference first

social

otherwise

the first

period

identical

best

saving

against

periods:

if

saving

pure-consumption-loans two

c z refers period

however,

that

allocation.

objection

live

not

argued

compulsory

would

;

hence,

developed

achieve

Any

sense

program.

to

security

less

consumption

alloca_ion

security

onl_

social

is

will

inefficient

Pareto

The program

itself

a

It

intertemporally o_

security

and

first.

their would

whether

Philippines.

confines

developed

income

therefore,

spec if ically,

paper

individuals

with

the

of

o_es.

considered

their

well

in

issue

a _Jocial

ob3ectio_

themselves,

allocation

this

to

PROGRAM

ÂŁundamental

needed

important

applies

will

SECURITY

ho':ing

_t

Qeneral

that

economies

is

against

most

most

_rogram

left

and

the

the

program

arguments

a

A SOCIAL

discusses

security

b_5_:ed

FOR

denoted consumption

earn

real

by and income

equaling each the

unity.

In

individu'al following

the

will

budget

absence

be

of

government

maximizing

U

intervention,

(c I ,

c 2 ) subject•

to

constraint (2.1)

c

If

the

period,

and

savings

per

since

by

assumption each

interest

on

his

repay

rate

of

5 L

SL

(!

+

The

reaso_

like

wish

to

to

borrow;

borrow.

institution The

who

with

governmeD't

savers savings generation

a

rate to

the leaves

" do

have the

However,

presence

permanent

llfe,

can

collects

individual

of

return

old

generation. the

equaling

government

savings the

old

_ggregate

Under

this

a

positive

rate

_,::; lend

_ene[ation

of

a debt

who

with does

at

cannoL

_

'his his

not

eo als¢

a government, the

savings

Unable

even

income

improve

n

Df

S_traightforward,

generation

the

L

L 1 ,

identical

succeeding

of

net

any

prefei_enhes

of

'_ n),

is

have

per

sLn/(l

earn

,_!der

not

0

=

n_._t l Lk_

the

>

while the

n)

s_vi_..

they

amount

- sL..I

no_

n

consisting

then

will

ho

of

period,

= =

interest

rate

the

individual

because

contemporaries

is

SL_l,

ind _"_'l<,u_._; .... ' _b,,.) _;_ves does

positive

not

is

> 0

working

di,ssaves

period

condition_

s

his

the

generation

where in

,

at

young

sL,

L_I

< 1

grows

the

individual

generation,

The

• if

saves

each

C2

population

individuals by

+

and to to

an

situation.

by

offerin_

transfers

the

pay,

old

the

the

younger

-

generation• by

amounting•

collecting

savings

generation. interest

on

is

the old

the

savlngs,

unough

•loan, i.e.,

government the

The

(i + __) sL,

government

eguivaler..t to sL

This

Since to

to

6 -

pays

b_get

from

the

young

principal

and

the

SL_l

(I + n)

an interest

constraint

of

rate

the

it

new

to repay =

pays

sL.

equaling

_ndividual

n _ now

become s (2.2)

c_ +

02.'

< I

!+n Thersfore, than

thw

the Q,e

_ocia]

op/>ortunity

given

sequrity

superior

by

security

program

countries the

that

by government

(LDCs) f!;st

•

greater

a centralized

yields

labor

resulting tax

with

,

a

Pareto-

a

social

low-income

earners

a

social

to employers in higher

the

program

reduces

the

down

capital

formation.

distorts

to the

firm's

do

not

be too

program

unemployment

shifted

less

program.

save

at all,

onerous

that

to

increases

factor

proportions,

rate.

Also,

employees

profits.

of

developed-

security

would

security

•

of development

that

a social

program

?

haVing

the degree

afford

seving

is not

against

it is argued

place_

S@condly, of

to do

cannot

them. cost

_aised

coun_yo

a compulsory

payroll

(2.•2•)is

,

has

hence,

thus,

proves

J,

objection

particular

the

run

This

by

allocatio8.

Another

in

(2.1).

program ,

a

set given

or

.... _hia

if the

consumers, could

slow

Studies argument

on

that

saving

behavior

on

LDCs

have

disputed

low-income

earners

do

not

save.

t_e

what

_s

'r

however

worrisome

high-yielding, Thus,

a

but

person

locked

in

against are

the

agency

usually

first

few

economic

for

exceeds

at

all

anchored contrast, income

on

projects

under

the

has a

.......

certalnly

a

earners.

by

a social

payments

security

especially

funds

may in

be

_nthe

invested

projectsthat

capitalaccumUlati0n

pointed

social

old

view

view

puts

distribution The

is

benefits

in yield

may

not

thisscheme.

having

new

protection

whose

time

to

ils usually

little

to

and/or

Hence,

access

instruments.

program

collected

reserve

have

retirement

time

benefit

the

the

accumulation.

l/

from

not

offer

low-income

(1970)

against

for

security

tax

returns.

down

do

financial

that

social

payroll

Rosenberg

and

assets

development

savers

saving

inflation

years,

attractive

raiseO

is

A

to

small

sophisticated

who

alternative

Since

In

more

inflation.

welcome

that

flxed-yield

adjusted

slow

is

on social

out

security of

security

the

program

in

footing

objection in

economic

investment equal

that

L_x:s

is

devel_ent. human with

program

resources capital in

5DCs

,,_

....... See McKinnon among others.

( 1973 ),

Adams

( 1978 ) and

Vogel

(1981),

-

addresse_,,.these

concerns.

security

value

preferences, the

of

then

8 -

the,.expected

If

children

security

governmentpension

helps

.01d_age

economic

determine

substitutes

for

fertility

_hildren,

scheme,cou!d_possibly

such

as

dearease

the

2_/ demand..'

foe

children

population

growth_

reauctlon

have

possibly

bees

:usually

program°

:. The

effect

affects

the

growth

of

program

is

one not

particular

least

AS

the

important

_ted of

by

so

that

quite

tax

:social

and

security

on

demand

RQsenberg, which in

this

and

paMroll a

of

investment

demand,

turn

is

"income in

turn

affects

the

on._

reason

is

make

in

industry,_:which and

equal

distribution

structure of

from

traditional Both

here.

needed

country

at

income

economy...°"

Perhaps,

be

than

of

_he

structure

the

to

red,uction

benefits

progressi:ve

mentioning _ affect

in t_@

econQmic

pp.2-3).

are

transfers

the

greater

1970z

worth

invest_%ent

shown

benefits

also

And

and

far

(Rosenberg,

_.

the

it

redundant.

as

their

why

asocial

cultural

security values

More

of

a

specifically,

!

parents and

therefore

pension the

regard

children they

have

arrangements.

evidence

A more below.

seems

detailed

less In

to

old

demand the

case

support"

discussion

age for

eaonomic

in sÂŁitutlonalized

of this

security,

the

Philippines,

view.

of this issue ........

is

Table

II. 1

presented

shows

the

economic

Philippines.

when

grow is

mentioned old

expected old;

and

expected

to

are

clear

can

readily

with

the

old

channel

for

the

of

from

probability

increase

this

influence to

the

their them

of

In age

policy

economic

they

being

cam

an

when

need

support

children.

There Parents

adjust

they

are

•their

arises;

do

they

age

to

dependent

solicit

percent

arrangement.

they

parents

total

90

old

of

the

to depend

children

the

whom

in

the

child;

program,

support,

whereby

a

of

Whenever

by

someone

children

makers

addition,

having

number

institutionalized_pension mercy

of

having

kind

children

percent

their

of

with to

of

having

support

advantages

contact. for

a reason

support

the

at

as

(89)

importance

financial

economic

value

Eighty-nine

respondents on

security

not

arealways

have

o_

their

able

to

emotional

w_ereas

direct children

maintain

suppoEt

a from

3_/ their

children.

Economic caused of

development

some

changes

children

presented reliance negative

See

as in

on

in

old

Table

and

modernization

cultural

age II.2

children

values,

economic seem as

relation

to

family

Lamberte

et

al.

suggest

age

income,

(1985)

however

including

security.

to

old

have

economic

the

The

that

the

findings amount

security

husband's

value

has

occupational

of a

-

i0

Table

PSRCENTAGE QUESTIONS

DISTRIBUTION ABOUT'THE

,_

II.l

OF OLD-AGE PHILIPPINES

RESPONSES TO SUPPQ,RT VALUE.O_' (1975_

CLOSB-ENDED CHILDREN

•r

Question

and

•Response

Importance of having depend when old as for having a child

Percent

someone to a reason

Not important Somewhat important Very important

2 9 89

Importance of being sure that you will have someone to help you in old age as a reason for wanting an additional child Not important Somewhat important Very important _ount of chi!dren_/

expected

reliance

None A little A

great

I0 12 78 on

I0 55 deal

35

a_/ Responses to this question are derived from responses the two previous questions. Percentages L,repr_e_ respondents who expected to rely on daughters or sons not •all, somewhat, or a great deal. :Source:

De

Vos

•(1983)

t_, at

Table SUPPORT

:

,

EXPECTATIONS CHARACTERISTICS:

.... ,_ ....

BY

SELECTED PHILIPPINES

SOCIOECONOMIC (1975)

'..

C:_iracterzstic ...... _....... ......

,

J,

,

Support Expect_tio_L None ,Littl e Great

i'._ _:al

Family

II.2

i0

55

"L

/

(_%) a_ _ Phil--

35

Income

째19"

I0,000 + 4,500/5,000-9,999 ? _000-4,499/3,000-4,999 < 2,000/< 3,000

33 19 9 6

54 56 58 48

13 25 32 46

c ({usban0's

Occupation--

Upper white collar MiO/Low white-collar Upper blue-collar Lower blue-collar Farming/fishing

.19 _ 21 12 na 8 5

64 6]. na 62 49

14 27 na 30 46

,_ucation College Senior high Junior high G r aromar < Grammar

.18 .'_ 29 15 9 8 6

32 63 58 55 49

19 23 33 37 46

= Significant at .05 if simple random sample a common measure of association, Phi can be used llke X but is _o! dependent on N and can be used for asymetricaily sized table_. It_ formula is (X /N)]/2. Pesos per annum. Upper white-collar occupations refer to professional* technic_ _, administrative, executive, an_ managerial workers, In Lhe Philippines lower white-collar and upper blue-collar occupations are combined into middle occupations. Lower blue coilaE occupation& refer to low-skilled or unskilled worker and lower service workers. Barangay = town center in the divided into those with urban with rural backgrounds (rural

Philippines. experience barangay).

Barangay residents (urban barangay) and

were those

-

status to

and

continue

modernization then

ana

respondent's in

the

education.

near

future

proceed;

expected

to

play

and

foregoing

have

not

in

of

Undoubtedly, a social

there

security

is

the

_iaving

in

trend

economic

social

is

expected

development

security

program

and is

roleo

u_Lscussed

strong

program

This

as

a greater

The

favor

12

a

some

arguments

social

security

and

adequate

support

the

Philippines.

in

favo:_

program_ fo_- having

IIl.

The (i)

Philippines

the

has

Government

services

the

System

LEGAL FRAMEWORK AND THE SOCIAL SECURITY

Service

government

(SS_)

two

which

social

and

care

of

are

government-owned

corporations

GSIS

started

in

life

insurance

benefits GSIS

operating

in are

to

appointed

by

the

the

labor

Initially,

and

the three

the

private

sector

created

by

of

leading

It

powers by

GSIS the

Social

initially

employees.

oÂŁ

President

the

(G_IS)lWhich

(2)

exercised

President

System

and

but

corporate

systems,namely:

provided

only

retirement

Board

seven

or

of

Of

the

Trustees

other

Philippines,

organizations

1/

functions

the

and

Both

Congress.

added

and

Security

members

three

of

whom

associations

of

employees.

SSS,

idea

ironing

in,

the

representing

The

The

vested of

government

government

1951.

composed

1937,

OF

security

Insurance

sector;

takes

OBJECTIVES SYSTEM

on

of

the

other

creating

out

objections

sector, it

it

SSS

covered

hand,

is

started

as

coming

from

finally

a

late

early both

started

only

employers

No.

186

in

comer,

although

as

1948.

the

employers

operating private

After,

in

and 1957.

business

and

l/ Commonwealth was approved on known as the 1954.

Act

14 Nov. 1936; Social Security

-

known

while Act

as

the

GSIS

Charter

Republic Act No. - was signed into

-

1161 law in

-

industry had

with

already

benefits

50

or

included

when

it

supervision

of

Secretary

of

members,

two of

manaQement appointed

started a Social

SSS

the

President

the

body

one

of

under

SSS

its

major

the general

composed and

the

labor

general

of

the

six

appointive

groupe

two,

publ ic,

the

to

be

Philippines.

super_

regulatory

GSIS,

Commission

the

of

are

is

Administrator

two,

systems

as

It

representing

and

a

benefits

Security

the

whom

Unlike

operating.

group

Commission_

employees.

retirement

Labor,

by

Both

more

14-

ised

of

by

all

the

insurance

Insurance firms

in the

_hil ipp ines.

The a)

For

objectives GS!Ss

of

to

the

promote

employees

two

systems

the

efficiency

of

are

the

the and

following: welfare

of

Government

of

employees

and

the the

Phil ippines, b)

For

S$_ :

to

provide

families

view

Although systems

are

elements. espoused The

program

by

of

differently essentially The both

first

promoting

against old

the

age,

their

their

hazards

and

of

death

well-being

with

in

the

the

two

justice.

worded, the

is

families

the

same.

element

systems

protects

sickness,

to

spirit

covered

protection

cisability, a

to

is

an

objectives

They that

of

contain

social

two security

income-replacement

from

a sharp

decline

basic as

program. in

income

-

due

to

family

sickness,

IS

lost,

are

_h _r_

issue.

proportional

based? systems

also

As

be

one

The minimum

second income

dependent

adequacy

is

benefits

are

the

especially

rel7_i_a_e:O?

fro,_

which

gather

later

benefits

rea]iy

element

is

for

of

adjustments

in

the

bensfits

consideration

is,

both

contributions

(p.6).

beneath In

a¢justments

t_is in

inflationary falling

into

howew_r,

have

also

the

points

lifetime

a sensitive to

number

be of

made

is

across

dependents.

"social measures

society

feels

two

systems

over to

issue.

also

rather

benefits

poverty.

the

but

the

periods, abject

and

which

case _,

of

g_arantee

oult,

whi_ch

the

the

concern.

adequacy

criterion,

living

are

disabled,

a welfare

of

it

st;ructure

systems

the

Munell

Should

that

this

social

As

is indeed

disZribution.

systems'

aged,

Thus,

make

income

expresses

that

the

systems.

from

the

replaced

objective

with

on,

income

contributions

f_-om the

themselves

during

beneficiaries

into

be

can

the

[:>[i_Jate insurance.

should

income

the

families,

much

fall" to

buy

for

How

standard

compelled

to

room

the

be

against

should

replace

big

of that

to

essentially

not

against one

the

a

noted

income

support

by

be

to

partially

still

survivors.

emphasized

is

retirement

lost

discussed and

or

of

concern

contributions

only

death,

families,

to

Indeed,

will

is

proportion

a ticklish

It

to

h_igh-inc<_<e

The

no

earner.

i_,tended

hence

especially

be

disability,

inco_,e

benefits

_5-

time,

prevent The

extent

Adjustments

families

to

take

IV.

SOCIAL. &OIK)UkC_ OF THE PHILIPPIMB

To, ue_ermzne

mne

SOCIAL S_RXTY

a_equ_uy

suc_a_

.,!.

the or

coverage

and

benef its

m_m

the payroll

tax

are

Boo,a:+

om ,.

SYSTEM

,

luuU++.my

: ,,

conS_,ribut:Lo_s"

,

Of

members

examined,

A, Originally, regularly.

in GSIS

membership ,,.

and

_..

permanently

upon all

was com_!sorY ., . •

..

appoint_d, elplo_ee._,. , This •..... i..i_ ,,,_,i _ ,_,.... j_,.. • '

"

was "

revisedi_. 19S__ inal_, e.plo¥,u_ io_gove_nt-ov_d " . ._ .:, ,, :,i contrplled

corporations

employees _evi'sed

of in

regardless:

and

government

I977'_ of _

include

casua_

offices, all

substitute

or

_ The coverage _e_p,lol_e_-_O_,ii_the

temporary Was

its,

ol_aen t status,

" "

first

year

o_

ope:ratlon, ,_

nmmbership private

" SSS .

.

was .limited only to mepXoyeea •'_'

business

and.industry

again

......Govern_nt

_l

On

or

Wi.._h!50 or

•

.

'"

compulsory

• ,

and .msploFers ,.,

.

.

:_re

_,

of

e_ploi_es.

followin_ year, the covey _"n.. exteided .... _ ......... to employees "' " "_ _ " , _il ' .__..,.. .... " " " and employers o_ private business,'mld industry w_th at least

In

...........

the

_._

-

_

-

1/ . From.,._here ._-i, gSlS and _ SS_,

_.,_

:!socl.al unless

secur,i_y otherwise

.;,:system ..r_ indicated.,/.

_o.,both.

the

-17-

6 employees. all,

In

private

revision

coverage

the

of

earning

larger

the

was

coverage

portion

at

or

of

more

the

was

least

effected

self-employed

_1,800

in

one 1980

persons per

labor

annum

force

revised

include

employee. when

below was

to

compulsory

61

years

added.

is

presently

is

at

An

of

age

Therefore,

a

inci,u(_ed

in

coverage.

Although upon

all

employers, the

the

enterpriseswlth

important

and

1960,

SSS

coverage

in

the

employees

not

there

however

are

charter,

over

SSS sixty

present

years

exemptions.

employment

compulsory

of

age

As

provided

is defined

as

and

their for

a_y

by

Service

.[ performed

(I)

by

an

employee

for

Agricultural

l.auO_

lea.*_ehold regular work

hia

wi_en

tena.t daily

employ_r_

or

wage

performed

worker

c,r base

for.an"unintercupted

months

in

except_

.who pay

Domestic

(3)

Employment of

(4)

•,.

or

performed

a ,private casual,

by

an

daughter,

performed

a child

by _he

and

businessof

of " his.. son,

in

sha=e,

or

not

paid

any

and."who

does

.ot

least

six

at

"

iu

purely

occupation

years

a

a year; service

service

is

periodof

"

(2)

by

employ,

not

_or

_ne

purpose

the ,,employeri

individual or

under of

I

home!

in

spou6@._ the

the

employ

.,:andi:_,,Service

age,,of

_t_W.ty

one

his, i)a.rents_ [

.(5)

Service

performed,

on

or

in, conneo_.iqp

with

an

- 18-

(6)

alien

vessel

when

|_Oh,_vessel

Service

(._7_) ....Servic:e

other

reflect

in reality

percent

in

the

Philippine thereof;

of

a

foreign

org&nization,

by

excluded

or

temporary

b_ regul&tion

'shall

Qf_

bona _

not

be

engaging

employer

the

coverage

universal,

o_ _course,

_ IV.I

presents

system

GSlS

of

the

to_al

system

tho_e

of

in

of fide

deemed

the

the

services

this

constitute

membership

in the

growth

the period the

was

rates 1981-83

prevlous

to

followed :

coverage

accounted

the

society

matter째

the actual

are

systemover

Philippine Whether

anothe_

annual

d ring

of

m_bers

he

than

the

or _ency

Employees

secu_'ity

Interestingiy,

lower

be

may

sentiments

the. rest

the

of

' performed

contractors

period"1976_83;

in

employ

the employ

services

of

employed

instru_aeutali_|,_,,.i,. _.

t,he

_s,

Table security

,ee_

ch_nge_

social

in

is

Philippines.

international

which

he

sa .d uontractors.

Indeed_

make

the

C_ission.

emplo

if

instrumentality

or

indepq_ndent

years

in

_.performed

emplo_'ees_

employee outs'_e'.the

wholly-owned

(8) " " 'Such

Of

is

or

goverr _ent

the

an

performed

Goverr_ent

_heir

by

,of the,: social between

system

ii to

during

for..by...SSS of

period,

the

,.Xll;embers.

total

were

12

membership

considerably i'e.,

1976-80

-

1++,j. _

YlbteW.I

+MIJlLM

Ym"

T_ _Ip

roll

iF t+tlE til_l_t,m]llll_ m +timU

_

rSltc_+l Ikemn

_ Nnm

•

ill,l(4) (In_

¢|)_'D (b +

i_

++'_,+"+J

+_+_,

:t,..++

+,,.+.

+_+,3

_,P.,_

(&3+

_I+

(6+)

(&4+

m._) m++ +rag;,_..+.- m.?_ _++_ t,..++_m+ <_+,e .+.®

[_

Ftlmmml. _

+m lm_l _,t_+_

in _¢nt,

t_S,7

_-Y

-

despite

the

to

the

wid_,ning

slowirLg

consequence

rates

._u_Je._._ting rates

in

iz insi

member

self-employed 1980. the

higher 1981-83.

oil

and

hts0

5_S

hip

government

membership is

....

,.<_. or

members

of

in

computed

the

oÂŁ

growt:_ to

annum

1980

of

starting

thus

affecned

relatively

durimg

the

period

efforts more

of

the

people

who

GSIS.

social

system

(See

annual

realized

hiring

more

co.refuge

stabilization in

The

_ compared

per

GSIS

a

prolonged

p_'ovide

compulsory

after

due

partners.

]981-_

more

be as

the

lower

membership

the

measures

a

period

resulted

the

and

memDership

the

of

could

economy

trading

contrast,

reflects

of

shock

economy

rates

became

one

the

In

which

automatically

domestic

SSS

PI,800 of

This

e)_perienced

dur_.n G

growth

This

persons

second

GSIS

sector.

annual

As

the

by.important

weakening

private

coverage.

of

earning

The

tot@L

the

experimented

ig_owth

legal

down

of

recession

in

20~

to

TaDle

adequacy,

total

number

IV.l).

the

ratio

of

employed

Between

of

1975

and

coverage

in

l

1977,

the

relative percent percent covered who

are

especially

system

saw

terms. to

61

of by

increases

However,

percent

the the

sharp

total

number

of

This

excluded

low-income

ratio

thereafter.

system.

legally

the

earners

employed mainly

coverage

but

actual

fluctuated

This

group

from

in

otherwise

means

between that

persons

are

consists and

about not of

40 yet

those

self-employed, wo_id

49

qualify

-

for

membership,

like

vendors,

etc.,

only

percent

2.8

men,be r s.

The

mechanism hence

for it

coverage

The

number

since

the

have

latter

_bi i ity

total

as

proportion

in

the

have

in

1983,

persons

are

an

effective

income the

the

SSS

earners, compulsory

Table

but

that

the

social

over

50

percent

be

said A

and

are

system yet

certainly

benefits

currently

offered

in

Tables

Some or

members

of the

the

system is

excludes

population

taken persons

security

that

the

I9.1 ).

still

that

to

also

lald-off/terminated

show

can

is

unemployed

jobs_

it

system

force

and (see

been

universal.

the

December

of

enforce

labor

employed

important, of

to

group

membership

little

being

of

found

their

Thus,

from

yet

active

may

a

As

sidewalk

self-employedo

includes

Results

owners,

self-employed

the

persons

from

store

reglster,_

not

economically

only

society

of

i

has 9

the

of

population. far

total

persons

_

covers

the

qualified

resigned

s_stem

of

latter

are

unemp!oyed

not

system

ratio

total

who

did

monitorin

-

sari-sar

who

lacks ÂŁor

21

a

leaves

may

of

the

program working is

still

regarded sig_if much

by icant

to

be

desired.

B.

Benefits

The summarized

the

IV,2

and

by

GSIS

iV. 3,

and

SSS

respectively.

are

-

22-

B_iS5TilI,ETl_E OFJEMEFIT$ al_,

i,..

i.

_nef_ts _

_

_

J

Serv_ce_

.......

_eporta_ _ualff_cati_

' Pmount of t_=_*¢

_uz_? _etiref_t

• .at_zCyBemef;:_

,_,._ offic;al m" e=pim/_ _;arCie_ of a_e p._._deune has_er,_ari_ a_ 3 _r_ of m=m are .=_tir_=.

Equivalm_to t nm_,_,h _a_.r.= for _ .yearo_ser_ r_..,., salary for each

..+ear el

salary rate. Refmno ofmet_re_s

--_

PersomiJccmtrl_txo:_c ,:,_.._

without inte_a_L, r.,) L_merAA5_ or the Amuity(_er_io_) _e_efit Pi_

I_ _ atta_ed andlor_let_ the .req_Zredabea_ len_t_ of • _vice a_ i_ilcate_ l_i_:

_ abe 57 y_.: =o_;,iy _ity (pelion) ¢,all__+?_ pl_ i,_ of each f:_ Of .S_P¥i{_ _

_,w_c_ ,;

35 3,433 32 3136_ _

of se_vi_f_ June ;_

: _e_ice =

60 6I 6i) 63 (__ oe a4 _ _O 18I£15 ova_

re_eive_ durin(J tr,_ i_t S yearsprior to c_teo, ret+r.... I_YI;+ 13+.,tal_t m_; ',-.. salary.

c) _

_ _I_

_fOPt++ +ltlr_++

_/ official ormlplO_se rq=_Lles_ ef. abe p,,ovidedhe has vemlse_ at least 15 y_vs of u_ic_... If he is below 50. _ of =me upon r_ti_t, he uy availof f_ _t ire=ent l_efit o_ly _xm attalnir_ a_e6_

195_

-.23

Ol_e

-

B_fit:

m_i_ He is:at I_ 61ymrs _ld _ seWe_ finsUl seevi_

ave'age mmthly coeds::...._ plu _._ of_he_id _;_u for eech _

I_ _ i_ys_sservi_e. l_s_ _ _ofep

Pmmm_ T_al P_v_al

He i_ _,_.is

He _ paidat !_ 36 _ly co_vib.rkiom _wb_ tte last five y_'s i_ii_aly _i_ the. _;te of disability

of _iL:_

am_y coepem_o_ .pe_. of. m_ri_

_thly

:-_

f_ _,._" _it_ _.

Pe_

or _a_paida _o_alof not less 180 _thly _ributiors prior to _he date _f dis_l-ity .,,-andh_s _r_ili_y is not eo_qmm_le.

Tmpo_m-y T_,I

6 _oethly

He _s ;_i_ at I_ l_eri_

imsiiately

_ee_e_t_ the

_. Rrv_vc_i_ Up_ _th

of a _

_) Ousl.ified.-_der Ol_e th_ _im _f _

_i_ _M

• b) No_ qualifiedf_' Ol_ge Pensi_ it _ _im ofde_h but

&isle e_ly. _i_ _,.a_e teed for 5 years _c_ _ be

_ srri_'_i_ _.' ,,:,o _arNmi f_ _ _'_ '_'_ _1_ are q_lifi_°

-

_)

24-

l _ly cmt_lbut:om mtb_nthe$ yam' perl_ut

mmdl_y _

_}

t_ h_s

lm uonthlya_rttmttom {p'soe to kis _le m tN slevice,

©} Nat q_tfmf the bmfit (_' A (1_ _

_

efe

,e

a) If a pm_onme tqsll_wd Imp su oe d_af_ tm_ _ev_od b} If pe_zomehad mt _ece_ved '_p su_andd_edut_ _

Cash_ e_l to I_ _F_ mdildyeoupmutlm f_, em:b_t_ _ _id a_trx_ t_am hut net lem th_ i_ Prlmey hmeflcl_te_ _li eecelve .rvtva_tp pt_w after g_mteed pm,lo_ to _o M t_y n qthf_ If a dss_billty Immioeee_pr_m_ _ms shall

e, lm_.s t_

ere

qeelif_mJ If decm_ _ _ ol_qle pe_i_f_ his pczm3ry _meficuru_ shall_'_ce:ve htsie ssthly Imau_ uOto _he end of the _a_tm_ _er_ cmv_iltte to imp _, Io_as_

Mitu_y Ji_ZtS

t_lt_t

_ 9mhfta_

UI_ I_,|y, theface of • _IL9 _ _, _n_mmms the_ shall _Sdt_ themlalm_ _ a i_ dies pr_r t_,the ttsH_ of h_s_man_ce • _'smj its matimuace_ t s_m _httl _ to t_ dai_tted tma,hcl_es _h_ m/_:mf_mm, tsm_m.

_efits

keles, m mWitiaml moent • 1_t_1_ to the f_ mw__ of h_ _ ,m_rz_e.

- 25 -

Ga_ _

Yalw

h:ber's

i_

should _

;x_

_ _

_

of the i_

I_

_

_

_Id:_ve _

i_

for

_

_,_m_

f_

_t_

wy_

F_:_

a _ol:_:v

thin clh mlw of his i_mm., Hem7 also _v_l

_e date divi_,_s acedecl_"sJ by _ spt_

theLife.._, Fued, Divi_ _ _istrilmt_t.ic_ a

._._

r_a ald_ of _t_r@di te_ b_spltsls _ic_ o_fg_;'i_,i.;_li_ to _heir f_fl,itiez, ire as foll_s:

met be_mfim_ in_ ho_ital • ._ to ill,ms ov injury _liri_,hos4flf_liZatloL _. _

t_s Imi_ at lemt

_i_ely pri_ to _ of _i_eli_ati(m_

_x_fimmmt.

3

m_:h _

P|_

si._le c_f_mm_

P1_/_ay

;ri_ of _ as fol!o_:

-26

-

Fllri raq_riql _ve _q _m m" s.qmV, or uh_ch tim imti_s

_. S_lir_l5ram In_of

-see-

_. _eem'sFee,

pmu

p_

Nidm_

&uqL_i_al RIIIN_ I_e'J'ef짜t a n_l_

dem_e_ v_lve

value _tB

is I

_ IIIIlIl"S

-

per _

_

,,,,,

-

27

-

Ninor Sw'geW

F 2O

Medis • _'geW'

P 50

6qe_pu'y PlU

3, _i_l _peme for Pv_e_io_l 5m-vi_es

_

a, klan

- PI_

_

#r_

_t

_t

sidle imei_l of L'onfi_£_rant foe ordi_ cams _ ei_s_l IO3N for i_demil mee cases, •.

b. OetmmJen_ - illLrd_ but mt _o _ i_m for siNle _Me, i_ of coefimmmt for al_ e_s_,s.

reinlmes_

f_e bos_t_t_io_

_._ u_T_i_ -- v_ , _ foeqoie] be0_fit _ liaited to t_. _ _ 1_

i, _'ieal Services, I. E_lo}_ehasbeetduly r_m_te_ a_liam:e_ a_i_pplies .to_e _I/[SIS, ttr_vid_ to the " afflicte_ ember _.,_Ick_eS.s, injury or deathis _xmi_ cm tim first _i_ comnc_ed;a_ _ay of inj_W m"

-

28-

3. The_/SSIS hasbeemd.ly _ihis di_ltty, andas the "_ of his eecovevy_y _'equive. lbese beBefits_ ho;evevt eve limited _o

_ita_

_is_i_of

_

death. _ i_ or the _e_l_i_ disability or deathfrom_m mploymint accident is coNees_ if:

_cia_,

mdicatm

treatme_;ii_l_i_ a _31_.._ra of re,h,ledi_. msber_ ,_ _t_il _e _ovi_ as _ _ p'a_icab!e,

khe plate _ his _uives hie to he[ 2, _e

3,

_,plo_ee is

if _he _y

_e_'fonsi_

is _taiv_

e_ecuting an.o_m_for t_e e_loyer.

f_e_ a. Tee_aey total di,_ility _esick-

_, ir_w cesh. t_,r_f_ _. equivalentto _ of _._-

_m:"of _5.ile ::_ ,.: p_l_' fO_a period _.,'t '_',_,_::_. e_ensi_ _a_ t_-_aL_.,_::," lastbeyor_ I_ _,. it i payable_pto L_ day_ :f _ persistsafk_ _his _._i_, -,:,,,_: sa_e_all be_ _m_e_,'_,: :, tc_al_isebility,

b. _ total disabillt_ (lo_of t_o. limbs_ _ne_ .c_. plebe_'a--

_ _loyee _c _._ _n_ tle_to-_hi_-benefi_ _,_i__. .paid a _thly i_:o_ _.efit re, as l_m9a_he li_ _:_

you_Jest: _tit_io_.

shell

an_

be gua_ee_

v!.+,__

6o_':.:.,

- 29-

e_Io_ed, n_eoYersf/__;x,:,,

ey_m;r_tio_ al lea.st ,-,r._,e

s_sts,

_I_.

tim_m_i_m" must _

t_er,

_epm_emts' Im_ioB. c. Pe_mmt _rtial _i_b_lity(loss of om tl_b_ f_g_r_ ieq,eta, )

_! mmthlyi_e _fit isals__viCm_ _,_v_les¢ _o tim i_ te_'i'_ _or _t total#_ility _ li_ite_ to t_ mmbe,ofs_h_ _i_t_I W 1_ for a par:; _. emt_lyimmm

be_fit_._._,.ll

_hepe.io_ of_mmm__, _,_._,_'_-u:). disability _i_ __ ;_

be.'_it

_

pr_

_'s

_'i#.,_r)

tewficimriez,t;".!:,

e;_vsle_to thirty fiv__:,,_

ier_ t_r, PI_6 for _ PtZL75for 6SIS,

.. d.2 FOMml brecht

_;_

R fme_ l:_fit of o_ thoemnd pno_ (PI_ilN) _i_: IR paidto the boaeficiart_,_ of

Lt_ d=_===d am=_

or

pnsL_.

_ll:=e=ber_it_ pollcln:lwforce foe at lem_ta yt,a_ exctl_ " ho!de_ of tee_,_v= eeue_tl pol_cier,

I. _li©y

policyIt _

_

Re_l_ er_ammt_olicie_ _i_ are policie_ _ithdefinite _t_ity _md ,,!th ¢_=h=rd l_m v_lms, _m' at ast I yea- in force,

polio A loa_

gl_io_i additicmalpo_iCi=S for =hichthe,_olders _ f_ all the Irlu= e_ _I poli_ies =fembers •_al_ r_wat_ fmokS_ re, vice l_tave_illi_fore=mlf_ _ich pre=iwsaeafellysho_Ider_l bythe policy hol_s,

_. _laey

_ _lopee mith a r_la_ ,Policy _._¢_hasb_m iafo_= for

__

_l_ee__l_tioa

Loaw wlue of a _ohcy _ eikk__ o__ oe it_ ca_, _I_,

¢uaisio_

m

Policyinforc_a_dz_ e_ .... val_ loa_-"

-

31

-

TableiV,3 _ICl_E OFJ!_EFITS i

L

R_iMml_ a, _th;y

_sio_

_o_thly Pemsi_

l.

_ is _ ye_ old) rcg_ted f_ _loymwt a_ has i_id at l_t 1_ mmthlyco_trib_tiom before tke semstm, of

M_niawm:_thly_e_i_-n- ,_._, _, monthly p_;_ sha_:_ the,sumof the av_a!;.:_ _o#>Ly _l_y cP_iit _l_i_'.-i_._l by;,_.

creditfoe_

c_ii_

ye_)"

years. tt_s befo_ the smiter ;_)t irmm_mt.

five_ _hil_ of .,ran ola+a_ _sio_P telimif _ .ith _ yo_3est _! .itho_t s_sti..... t_tio_e_iv_la_t to I_ {)f the _nthty _ion,

'

b, k_

5_ _unt

of

_

_.ild- PIP..

Thi._ is _)"_t_t¢a mmber_o is f@._ars old _ o_, _rated from _loy_,_) has _i_ .l_-_ k_ I_ monthly,_nt,,i.t_io_ _mJ is _ot vo1, unt_¢tIy '_y __qc<,_t_'ib,tiota.

Equival_t te t_¢_ _t,_'i,b_ + ti_ _d pl_9 6_ i_e_t t;hePeon fr_ t_ day . _),ifiestoiM _its,

ThisisF_tel c_dytothe _imry

!_ilim_ lo_hly, :' _t_.._t..:.",_ -- :""+.8 +',

has _id _ _thly _rilmtiom _iorto _h_ mm_ter of_th,.

re_i_,

This /s.gP_nt_ to emh of the fi_ de_m_k_t _il_Pe_ of a _

Hini_ _am_mt!_+ foP_ch child- _1_o

::,. _ath a. i_O_hlyPer_ior, _o_)th_y _$io_

l)We_ts'

_fmio_

'

?_?._'_:_:._?

- 32-

f

miimir_uiththe ,itho,t s_mtit_ioe_ eeFivalmt to 1_ of thinumthly _koe. b. imp _

Ammt

_. :_r_'al Sr_mtSeeefit

This . is Fam/ to primry Mmftci_-ics of a _ Nho haspaid less than _ ¢mthl# contril_tiom prior to tim smmtm" of ckmth m. in the aim of wii_y bmeficiariesto the t¢o_ beneficiaries .or to persm desisted by tim melber PepNless of the _ of em_trib_ ioaspaid. ihlsispayable tothe_iciaries or to _W _n _ _¢-t,ally _i_ t_e _-ial e_mses of the _.eas_ _ or Baiom _.

NiaimmImp _

_

-_1_"

,

Ill, IN

3. Disability a. _o_hly PS_sio_ "' _

Oel_ts'

_, L_ 5_

_ts is _'_ to a _ suffers pemamt total _ _ methly co_ributio_ se_t_" of disability,

Pemio_

u_o _ial

ltfoee

iliniJ_ mothly pension - I;_. _i_m i5 _u_te_ as i_

the

1_is isit',ratedto 8¢k ofthefiv_ de_nt chil_b_m of a ;Iri_e_t totaldisability peMi_mpkqirmin_ _ith the yo_t ad _i_bo_ s_tit_tio_ eq_ivalmt to 185 of the 8o_thly_e_sim, ._is is <9raC, ed to a Jumbe_eho s_ _ toted or _rtial disabllity: b_ kaspaid_ than _ mmthly contrib,tiom iffo_ the _mter of disability.

l_iJcima d_s' _io_ eachchild- PI_.

for

.,

Mira. leq: um _ f_ _ne_ total disability PI_

_. 5ickne_

He isco_fiwJfor_tlint4 days due to sicim_s ormj¢l_/md has l_id el l¢-llt 3 imthly _trikticr_ mithint_ l_-m_th •period •ime_ia_ely " t_fo_e the ssms(_ of siclme_

The dailycash at,L_c_ i_ ,eqlivalm_tto 8_ th-< avePate daily salary credi>, _th a BLnLI_ of !_ a_l a _; iml :_f

5. ilte, mty

This is Fa_t_ddue to ckildbi_

Timdaily i_ity

druid havepaid Z I_#.ll_ty. /ri/tiom .iihin i peP,' ilistely before the B_L_ter of the _ti_. _ly 'the first

": . _'si_ ?_t/tilli.a

,_tl_,_ _:ty _:-. by 4_ d_,_._:..

,_-33

four d_liver.i_ apecovered,

_, Employees' C_ensa_i._ (sueas in_I$)

L

Salary

_ber _ paid 34 _hly co_t_i_tio_andt_s lu>tyet been _rar_e_ _tiv_e_t briefit or _ra_t total disability benefit,

Oee.m_h _l_ry exceedIPI_.

_t

_-t _o

hasnot yet bee__ra_ted r_i_m_t hoofit or _t total disability bB_fit. 3. Ho_si_

_ h_ pa_det _¢st 12 _thly co_tri_Jti_ihe is_t a hor_ _,_ he has r_t )'et _ Era_te_

The_a_i_1o_ _i_h _,_al,_ not _c_ _I_ _,h_:L_ the ".c_t o_"_h_ff, _;

_e

i. _

L_._n_ _r_ of _,

3. _

_, _nity.

P_os_i_l

1. _l_lican_ must _ a corporation _,ly ircoP_atcd _r the Ph_li_ine C_rparatio__a_, 2, _ l_t _ _f _ts _r_or_ora_ors o_ _tockh_i_e_a_ _octors of medicineor au_ii_y m_cal _rso_h

to _, of _, Ic_n to ba _l_,i_ f:r,,

apldi¢_ for; val_m _f

the

Loan _iI netexc_ ;_7'__:-'_ f_ a _5-_ h_.:: ...: R_ for a 5_-_:, h,J_..:,,.,_,_/_.

-

Benefits

of ,

of

.:

their

both ,'

systems

in

case

of

1951

GSIS

to

SSS,

implement

couplement disability

known

provides

dependents,

of

for

expenses

of

as.

the

GSIS

to

the

program

and

.

can

from

nevised.,

derive

adding to

stand.lr_s:.:when retizement,

_he

help

:_and

and...._their

$_pleme,ting ,626

NO.

(EC)

end

State

services,

for medical and

.the

oiherwise

provides

suffer

cash

work-related

No_e

that

systems

al_o

offerservice

sss

star_ed_givlng

not

to

thus from

new

aside

increasing

the

from

social

moderate of

n

existing

fa_ly

pension

flve,equivalent

total

to

benefit's

benefit s were in

,,_the decline

or death..For

monthly

loans

system.

benefits

earnings

disabil_ty

excee0

which

surgic91 members

Who

6111

Act

death.

membersu "_

respective

Aslde

members

(R.A.)

to

. ,

benefits,'_: both

a member

pays

services,

system's

disability

.. •

their

EC's

and

started

Medicare

(PD)

the

1975#

Am,

compensation

rehabilitation

sickness, security

The

In

in

SSS began

Decree

_ntr0duced

systems

system's

and

-Employees'

Fund.

added

medical,

the

start

benefit.

Republic

PhilippiQe

Of 'P_esidential

'benefits

also...,

was

was

In 1972_. both

.the

_. I, .... 1975,

including

.

benefit

the

L

benefit insurance

payments

hospitalization,

provisions

since •

•life

1978.

as

.cash'

Insurance

expanded

retirement

the : .p_vlsions

otherwise-

know_

been

'

maternity-beneflt:.i_

that

have

•

operations.

only

34-

tof0

head.cease example,

to each percent

living

because in July

d_.pendent of

the

of 1975

child basic

-35

monthly

pension

Likewise, not

in

monthly

to

addltion

pension

exceed

-

five

to

is

in

the

given

the

to

event

retiree' each

of

s

penslon.

dependent

death

o_

child

a

disabled

membe r.

As

may

8ocial

be

gleaned

security

%he

systems

employee

that

income,

%_hether

adequate

to meet

hls/her

family

contingency this

try

and

contingencies

from

is

as

to

cash

the

as

IV.3, to

from

a sharp

benefits

financial

and

possible

family

lead

the

• IV,2

m_uch

his/her

would

of

Tables

de!'ived

requirements

the

course

a_other

matter.

objectives

of

of

, all

in- _fam_'ly

therei,

of

occurence

protect

almost

reduction

after

both

_ _re

a memb, er_iland

a

particular

We_turn

now

to

issue.

Since system

is

replacement

one

of

to

replace

ratloa

the

income

of

the

ratio

Joe.,

the

social

employees, between

security

the cash

system's

benefits

and

• .

_-,..

income

lost

•

due

to

the

occurrence

of

a

particular ",

contingency SSS

have

will different

specifically methods

be

are

methods

•pension

comments

are

the

monthly

salary

60

contingency

months for

In

first.

in

arriving

benefitsw

discussed

few

last

considered

in

detail

order. of

members

immediately SSS,

for

and

in

First, in

GS_[S

the

cash

beneflts_

their

last

membe_. I.

benefits

most

preceeding the

that

Appendix

the

' .,._, '

Note at

the

;

,_

36

These

Ho_Ver:_ are

on ,the

occurrence months

_ a

_ase_

recent:past_

the

and

Of for

a

GSIS.

-

This

method

coverage

yields

earnings

salary

credit

GSIS.

This

replacing to meet buy

than

the

only

bscause

years

of

of

system

presents

as

the

seeks

exceeds

It because

of

However, than

ratio

drops on

on

ratio

the

lost

S$S: and

_3,000

for

aimed

at

deem¢,_

income

family.

High

want

necessary

Income;'earners

to be oovered

said

monthly

more

than

sss

of

at

_120

the

monthly

replacement It means

20 ratio

earners

_hat more

the than

GSIS

lower

income

at the

lowest

minlmum

monthly

mon t_!y ratio

ratio.

salary

b_ond credit.

the

decreases

for

than

that

GSIS

_3,000

aSS

salary

'pension

Because

credit

lower

However,

salary

assuming

of

is substantially

ceiling.

credits

ratio

replacement

monthly

and

replacement

the

replacement

the

the

the

that

unity

the

I and

low income

that

pension

salary

increases.

the

precipltuousl_ the

retirement

in Appendix

credit

the GSIS

ceiling,

beyond

for

securltyls

if they

Note

brackets°

ceiling

the the

to protect

earners.

replacement

monthly

expected,

salary

higher

enforces.

a maximum

different

As

is considerably

credit

Second,

social

given

service.

income

lifetime

the monthly

for

formulae

decreases

_I,000

of

needs

ratios

the

if

necessities.

IV.4

using

than

_!,QO0 the

a portion

basic

benefits

used.

privat e insurance

replacement

rapidly

cash

Is.:_escribed: is

Table

high

were

t_e. basic

can

higher

36-

it more

of

the

aSS,

its

of

GSIS

replacement

which

is

its

-

37

-

T_ie IV,4,

(Y_,

of Ser_i_ez _)

"X

._TF.:

Repla_n_ _it

ra_io ;s

ghe _atxo_n

Id_monthly i_o_

far _SSis equaltothe average_hil_

__

_

_ala_y c_i_,

f_ _IE

l_is _

_ aiffe,,,J_

- 38 -

The have

replaaement,

understated

security

ratios

the

actual

_beneflts

earnings expenses

suchas

workers•

for

then

replacement

the

The Using

to

food,

not

t_×e_,

income

tax.

to work ratios

replacement.

•ratios

while

be

as

said

been

a

lot

securit¥

system

because

it '-repl•aces a signlfica•n_, proportion•of

adequate

income

of_members,

especially

there

are'certain

qualifications.

minimum for

wage

Cap_tal-Region. I and

Workers

become

irrelevant

the lower

workers • who

ceiling _3,000,

outside

that

monthly

for

61 percent.

are

going

There

the is now

monthlysalary this

was

met

reti_ fe.r

Rep_ceme_t

However_

_874

salar_

ra_io

to retire

unless

was

Capi_al

members

than

•upwards.

but

_ational

replacement

to go down

on•the

the

•means

actual

years

IQst

legis!at_d

National

_800

revised

aveEage:

the

'It

expected

The

in

IV.5).

be

earners.

five

Table

must

lowincome

members

. the

the past

for

social

_protectlon.,.to its

for

month

social

Philipplne

rate

workers

Hence,•

the

high.

_or_

i_

provides

higher.

relative1_"

adequacy,

per

mont_

_850

per

Region

(see

credits

below

after.

1984.

new

ra_ios

-reti.rees £or

i_ the'._near..future

ceiling

on

sa!ary

a proposal

credit

for

wit_;

strong

SSS

to

by

earRi%gs,

criterion

that;

subtract

etc.:., .Incus_ed

indeed a

may

..pr.eret_rement

If we".st.lll

have

are

•

social

from"preretire_en.t

coul_

income: 'replacement

IV.

rationsince

tran_o_t_t.10n_

reporting

might

in Table

replacement

are

_are subject

presented

credit

increase from

most are is the

_l,000. to

Eeslstan=e

from

-

employers

who

economic

the

credi_

revision

from

to

The

because reduce•

other

guarantee

a

disabltd,

and

needs.

Table •. IV.

related

needs

Assuming themselves spending If

about

both

the

6

were

_985

bona

is

salary

likely

to

is

security

for

be

exerting

fide

members

then

they

cost • of

the age,

the

monthly

they

their

social

of

six.

support

then

satisfy

•must basic

family wife

to the

income

average

and

is

aged,

obtaining

reference

of

the

of

a

to

syste_

minimum

cost

retirement month

for

The

the

husband

per

also

monthly

government

support

shows

their

this

social

average

_ood

the

during

the

survivors.

to

the

have

deficits.

income

including that

But the

of

dependent

be

on

ceiling

budgetary

minimum

: deteriorating

the

_7,800.

objective

by

employees

currently

its

however

b_sic

to

affected

Government of

_3,000

disapproved

-

severely

conditions.

proposed

effort

are

39

only

will

be

basic

needs.

security

system

A/ for

20

P800

per

needs

years, month

(see

to Table

minimum

monthly

i_

therefore

the

can

social

retiree's

enjoy

basic

shou].d

a pension

IV.4).

wages

for

be

said

security

earning

that

Since

the

past

five

the that

system

be

the are

can

not

meet

their

average years

pension

.than basic

legislated

was

benefits

adequate

less

to

above given meet

_800, by _he

needs.

This is a reasonable assumption since and Statistics Office reported that the employed workers per family is 2.0.

the NatiOnal Census average number ot

- 40-

Table

LEGISLATED

IVY5

MINIMUM WAGES FOR NON-AGRICULTURALWDRKERS _ i:(In Pesos Per Month)

Year

N_tional Capital , Region

Areas NatiOnal

.Outside Capital

•1975

253.51

253.51

1976

305.27

287.09

1977

363.60

336.33

1.978

397.44

369.91

1979

'508.28

1980

480'00

69_o42

671,14

1•9•8'1•

"1779.72

76'7.85

1982

_803,46

776.18

1983

865.06

83:7.80

1984

223.87

_verage•: 11975-_'979 • _ 19_0-1984

the Re_ion

1,196.34

365.62

345.37•

874.11

849_56

--

I .................

qote:

Figures; _ssui_e an

average

_ource

:of Bagli¢ :Data_-_"_National

_-.,

of waQes

25.25

working

............................

days

Council,

M1"_istry. : __ of Labor: and

Em_.uy.m_n_

per

month.

•The

analysis

retirement 1985.

benefits

HOW

Were

above

about

they

of

the

-41

-

has

focused

on

who

are

going

to

of

those

who

retired

those

pensions

sufficiently

adjusted

to

cope

the

with

adequacy

of

retire•

the

in

earlier?

rising _ cost

of? living?

The

social

benefits (see

in

response

Appendix

benefits adjustments

who

His/her which

earns

Table

IV.6

pension immediately

have his/her

level

(using

same • period.

This

worse

the

off

behind

since

the

The disability retirement the

adequacy

basis •

benefit. these

in

arrivin is

So,

more we

_ or

have

benefits.

old

of

• the

a minimum

wage

December

amounts

•1979.

to of

_365

_425

_ (see

monthly

pensios

1984, an

their

the •cost

whether

corresponding

105.2

that

increase

benefits

of

by

of

credit

by

pension.

rose

see

his/her

initial

for

To

income

_522.34,

in

retirement

con&ider

then

suggests

increase

the

day

reached

CPI)

adjusted

If

1980,

cash

inception

His/her

_315.42.

its

' its

salary

I). !

in

us

th._ last salary•

Appendix

aojusted

over

let

adjusting

since

V.7).

a monthly

is

shall

percent price

monthly

then

pension

on

him/her and

SSS

(see Table

retired

been•

•prices

1980,

sufficient,

average

has

rising

Since

times

were

system

to

If).

three

worker

security

. Were

his/her

monthly

increase

of

However,

the

percent

65.6

ge,eral

during..the

retirees

are

pension<lags

getting very

much

livin@.

at

death

less

the

more

or

and same

less

_rmane,t

as a

that

falr

Idea

for of

-

42 -

Table

AVERAGE

IV,6

COST OF MONTHLY BASIC NEEDS IN NON-AGRICULTURE, NATIONAL CAPITAl, REGION BASED ON A GIVEN PAIPTER_ OF FAMILY EXPENDITURES (For a reference family of six)

Year

Monthly

1975

P

823.90

1976

875.10

1977

944.40

1978

1,015.50

1979

1,206.60

1980

1,408.80

1981

1,563.90

1982

1,784.40

1983

1,978.20

1984

2,954.10

Note_

The National Wages Council (NWC) estimated the average cost of daily food and other basic necessities (ACDFOBN) to be P52.13 as of June 1981. Using the growth rate of the over-all CPI for Metro Manila, the average cost of daily food and other basic necessities were derived then multiplied by 30 days to obtain the average cost of monthly basic needs.

Source

of

Basic

Data:

National _[nistry

Wages Council, of Labor an-dEmployment

-

43-

Table

IV° 7

ADJUSTED

•PENSION OF A MINIMUM WAGE WORKER RETIRED AT THE END OF 1979 (Starting Pension: _315.42 per month)

Year In

Adjustment the Pension(%)

Adjusted Pension

WHO

CPI (1972=100)

1980

20.0

1982

20.0

45,4.20

364.9

1984

15.0

522.34

604.4

Increase:

P378.50

1980-1984

294.6

65.6%

105.2%

_

Note:

The

starting

pension was and Appendix

derived I.

using

Table

l

.....

IV.5

-

The

sickness

inadequate. injury

benefits

!n that

hospital,

the

is

not

he/she

may

avail

of the

may

to

of

Medicare

i.e.,

Medicare

benefits,

are This

maximum

benefits

Medicare typical

to

be

sickness a

hospital

Additionally, total

benefits

defraythe shown

plus

cost below

with

the

for

some

charges

a

benefit

However,

compared

or

in

income

income

clearly are

sickness

day.

to

grossly

confined

benefits.

enough

are

connected

sickness

is

private

the pesos

not

hospitalization.

a

of

twenty

benefits,

system

non-work

exceed the

the

emploMee

avail

sickness

price

of

event

require_

he/she

which

44-

of where

average of

its

services;

Maximum Medicare

TYPical Private

BenefiÂŁs

i.

2.

Races for a_ board

room:

C.

p22/day

_75/day

_50

_405

for

ward

3pe_aÂŁing fee for reed ium surgery

z.

H__ospital

SurgeQn's for medium surgery

fee _325

FinancinqtheSgcial

The method, system employers

Philippine not

a

collects and

variable

SecuriLtx_Proqram

social

security

"pay-as-you-go" contributions sets

- _2,000-5,000

up

system

method, frQm

a reserve

of

both

fund

follows

reserve

financing.

the to

a

pay

employees current

The and and

- 45 -

T_leIV.B

.fund

_m_rilmtim _el_olicy

_lar_ ik_

io [AL_ECuA!TY: a, Fore_oloyees

19Salary brackets _m_ollows:

covaeM B_

9f_YchlY

_

_,4Wmolly _alarycrc_t'.L 3,_ _o be centrixI_e_

_._

L_O,_ 35_._ _,_ 7_._

_

Forem_loyees _ byBSI5

_

- _,99 - _,_ - 69_.9_ ,- _!_,9_

;r_

_.W 425._ _,0_ _

3 _lar_brac;k_t_ asfollc_s:

f_rst

_, _i_:are

(B._,

I_ _f the _'_l mont_;ly _ai_@dislrik_te_ is follo_,_

3_ILN

L_

B _lar_ brackets _plicable to _ployeescovere_ by5_ an_ _2.% as fo!l_,_s_

P 50,_ -

For a mm_ly_r_ of over. Pl,_@, _e _triIm_i_ i_ _ am _ mm_hly salary c_r_it_f #I_,N.

99._9

75._

_

_,_

of kl_ m:,nthly __1:_,", , _/_. '

e_lo_.

- 46-

_, Foremm?l_e$_

l_,_1_,_ _QO.N- _z_9._

17_M _5,N

F_._ mciChlyr_l;,._._ ' ,_. ,._. -Pit!b_,_ the. co_i_.-._, :

_,f_

_.m

.

_I

_!_ _:_)i::f=_:._ :_

-

OU_

._,_;hly _lary,.

.......

i_;.06 _he _t_l

_'

,.

-

future

benefits.

prescribed general

The

benefits

47-

government

without

responsibility

for

guarantees

being

_he

payment

diminished

solvency

of

of

and

the

the

accepts

system.

4" i_ ,

The

in

schedule

Table

of

bracke£s• %

with

To

8.4

and

a maximum

selary

rate

the

_percent

foll owin_:

of

3.33

5.07

percent,

"_applies

_er

the

for

monthly

percent

by

for

determine

employees

cO_tribution

is

j

contributions

IV.8.

contribution

The

of

base

be

SSS of

SSS's

social

uses

given

i0

per_month. I proper into

the

employees;

and

contribution

sala<y

of

iSalary

security

by

same

is

._a_ount___

divided

shouldered The

SSS

_I,000

credit

monthlz

and

actual

employers,

employers.

different

the

salary to

GSIS

rate

' credits.

/.

Unlike GSIS'

SSS,

contribution

the

actual

employee

(see

Table employees that

a government

is

employer

IV.9

for

as

This

is on

that

the

t_ey

move

gives

the

amount

according

credits

employee

pays

credit.

._ _gher to

salary:base. - 18

be

the

perC_,t

divided former's

contribution up

to

by,

a

of the

actual rate

higher

for salary

IV08).

employers

in

a _a_imum

relatively

salary

employee

ha_e

depending

Note

Table

and

not

salary.

increases

bracket

salary

rate

salary.

employees

Note

does

monthly and

monthly

an

GSIS

the Beyond

of to

contribution monthly

eGuivalent a

payroll

private _l,000,

sector an

to tax

salary

_I,000 twice

falling SSS

due

member

credit.

and

below,

greater in pays

from

than

the

same

a

fixed

Teh'._IV.9

6SlS Saim-y

_

_

ss_

............

_

_

Gra_

_)cialSecuri_

I_Jiea.._

_im__

T_al

for

_-ard

.6"-

l_!5,H

9,_6

13,11 1.5_ 1.5_

I._

Ilia5 15.96 _a.O5

_.I0

5.46

175,06

13,1_

I&_D

_._

1,75

15.30 _..3_ 37,_

5.7_

9.80 _.._

_,_

_._o

_._

e.M e._

Z_

_t._

7._

n._e

3N,_

2F_.5l

_&._

3.75

3.75

3,,_

L_._5 _5,_

I&,_

_'/.0_

7.58

T._

6._iD

_._

'95,06 ?.56 7.50"

1_i._

9_56 11_.58_65._

_,%_

7._"

3LN

_a_,,__e_

7._

._.W

3_.50 51_5_ _5.U

-ML_

:t._O.N 3_80

..,SL_

65._ _5_._

7.50

E._

_

_m _.5_

7_._ |_,,_8

5_

1,5,5 1.55

I._5

5.65 9,L_

_

IoT5

7,98 I_.,_5_0,85

a._

_ae-

e.,,_

15.80

3.73

_?B

3._

I3.75 _._

35._

_:_,,M

_._

7._

7,'_

_M

_.50

,l_.._

Tl._

33.30

'_9.70

7.50

?.._

"I_.N

_._

.SKID i_J._

53,3_

_TB

7._

7._1

I_.M

ML_

6&_

11_

3_.'L3_

_._

7.56

7._

t_.86

_._

(_,_

169._

_,m

_.,_

l_,O5 0oi

_

-

rate

of

_40.80

imposed, even

beyond

Nots,

because

GSIS

_3,000.

an

For

however,

SSS

that

insurance

in

This

of

member

pays

_322

member

per

having

GS_[S me1_bers

addition

somehow

the

example,

contributes

what

._:embers. for

a

a raonth

times

llfe

month

whereas

_5,000 8

per

49-

£o

maximum an

member

month,

which

the

same more

retirement

base

increasing

a GSIS

have

justi£i.e_

salary

ea_-.nin,2 is

_

_-

isalary

p_ys.

bene_!ts,

e.g.,

benefi£s

a higher

amount

than

$SS

contribution

rate

GSIS.

SSS

self-employed

emp3oyee_

and

employer's

undecstandab!e

that

the:' s_cie_ additional

$55

&SIS'

annual

Table

_f

I_

to

have free

contributions

(see

exceeds

both

is

the

there£ore

shied

away

from

Of

themselves

' the

the

of

Although Table

GSIS

iV. I),

latter's.

rate

and

GSIS

salary

and

SSS

members

the

are

f0rmer'

This

is

base

are

member fewer

s

annual

because

the

h_gher

than

SSS.

is

to

be

noted

to. an'nual

benefits

the

the

years

shou__.(_e_ It

self-employed

iV.!0.

contribution

those

to

contributions.

program

memDers

contribution %

have

burden.

t.)_al ("_

are. sho_.,r_, in h_an

many

security tax

The

members

Table

iV.10).

years

in

view

that

the

payments

greatly

soc:_._l security However, of

the

ratio

the

system ratio

deteriorating

of

annual

•exceeded has

been

declined economic

contribution unity

for

operating in

the

last

condftions.

all (see two A

- 50

-

Table:V.!0

TOTiil.I:_)NTRX_L_'fIN _ _ITH

•

H Hi S

_...... ]_mmfits

:_3CIJ__EQalEITY SYETEPl

_Y#_.__ _

Ceetri_timm

_mefits

i%_

1t7,0:

:,:: ._k,7

6S

;39.1

_9._

2.8

74.9

67

_-._.e

_

_._

_9

_,_,4. P..

I_9.5

71

306.5

72

_+S_

_tr_t_or_

Benefits

......

_5Y5_ .....

Jim.its

_e_efit_

151.9

,_,,7

3,5

_-.B

I_.1

_._

L_.{_

_,,_

3.B

_.4

zt,_.+

IH_,7

P..5

_l,3,.e

71.B

3.9

_

73

_B

314.7

_,6

4_3.1

i_7.5

4._

_,_

7_,

5_AI. g

.:L_._

1.6

537.7

+H_.5

•2.l

_.

75

f:,_

_

l.a

7_P,.2

_,9

2.5

P..I

7_

_7.2

_17._

1.9

_,,,,_7

335.4

2.5

2.2

77

915.3

7_

115_,_

6_._

1,_

11_.6

47&6

2.3

_._

79

14,_9

654.e

2.2

14,z_.4

5"76.7

P..5

2.3

I_

154ktl

74P,, 4

2.1

1617.7

&f_l,,4

a.4

P.,._'

3

_-._

_

3.Z

B

4.5

_

_

f

_._

O

t_7.e

"

_

9

3,_.

e

&,_

i

__6

_

_ 11.4

+

3.+

l

7._

_"

, ..

_

• ,

.......

1

_115,3

IJ14,3

2,11

I9L 3

11Ll6, 6

1..9

I.9

_/cR:_ramI_2-76_ filures pm'tainir_ to_I_ mereba_(J _ fis,_l yearNhile t)_ose frw I_76-19LI .ee ealeeda_ _-_, These .figms_s inc1_de con_rikti(m andline, itp_s frmmlledicm.e me__mplo_* _ioe.

,L_52-

lot

of

workers

were

laid

offi,' and

therefore,

were

not

while

the

number

has

continued

• 9'"

contributing

to

the

system

beneficiaries

enjoying

the

anymore system's

benefits

of

to ris,3.-/:

Both

GSIS

revenues, etc.,

ioe._

not

exclusively

rapidly

(see

funds

the

an

of

unwisely

by

law. to put

contributions,

interest

system

their

the

current

payment

up

IV.If).

As of

amounted

to _28B.

amount. in the invested

Thus, medium or

if

their

income, and

shall

benefits. benefits

payments

1983,

This

unless

its benefits

quite reserve

i_s certainly

syste_

is going its reserve

are

be The

its!reserves

December

the

term

which

of over

to build

all

administrative

fund"

contributions

system

Table

self-sufficient are

of

the

insignificant

required

in the "reserve for

excess

enabled

are

to meet

expenses

persistent has

SSS

members'

needed

operational used

and

not

to

be

funds

substantially

ff increased

without

In1983 increased

a corresponding

increase

alone, 75,428 workers were to 86,186 workers in 1984.

in'contributions.

l_d

off.

This

4_/ on

See Appendix llI for the analysis the reserve fund of GSIS and SSS.

of

the

;rate of

return

- 53-

Table iV,11 mEl_

,,p_

1_-7

_ 6ro_KPate

E.i

-.

il_.;

_.9

-_(p_, 1,_h

b_e

tpj

_ _e,me_ __o

;Bt.9

-•

;_15.0

-

1:167, 7 I_9

IZ'TT. B

L_.E

fil

II_4.5 4_,4

I143_9

-2.Q

13L_

_-4

64

_71.9

_8

1i7_.4

1_.8

1747,3

13,8

_i

527.0

Z_._

iE_._

1_

_W0.3

13.4

_,7

_, i

i_,+,

i_77.t

i_. 9

L:r'_7. ,+

,iZ.i

74

_47_,7

_, 5

3571,8

9,_

_.47.5

i_, 8

76

_

2+, 7

_

27. _

_77.7

_.l

3

#

-

SZ

' itasi.s': "_

54-

glt3.z

z9.7

._;z_

_zz..a.

-

V.

ECONOMIC

Social

been

section

saving

A.

saving,

have

This

and

great is

saving

that

it

public be

offset

by

for

arises

if

financing net

so

an

national lower

a

thereby

private

in

security

the

in

public

this

is

the

domestic rate

as

volume

decrease

of

who

a

saving

economic

m

saving in

saving reduces growth.

their

save

substitution

However,

a reduction

may

might

"pay-as-you-go

is

in

regard

personal

saving.

foreign

saving

in

saving

in

public

s_urity

Workers

National

savin@ of

social

benefits

therefore

a

case,

Assuming of

On

distribution.

workers

is

uses

a

the

saving.

therefore

saving.

lowers

income

absent.

security

straightforward.

as

country

since

volume

and

of

d_strlbutlon were

social

having

System

There

long

that

pattern

income

of

reduced

social

increase

effect

security

is

the

own.

affected

social

Specifically,

their

saving

and

supply

have

reason

to

current

supply

about

future

contributions

interve.n_on

Saying

may

The

of

effects

labor

plans.

on

the

and

SECURITY

The

concern

included

less

SOCIAL

form

if

examines

economy.

have

a

different

Security

One

the

OF

labor

investment,

Social

program

is

-

people'sbehavior.

consumption, could

EFFECTS

security

influences

55

of

will

not

saving

is

a'problem method

of

is

zero.

The

the

volume

of

zero,

them

investment_

the and

- 56-

The its

Philippines.does

social

as-you,go"

is

,

security

system

method

of:financing.

_u_t _,t . .-'_ __,.. a ,' transfer " _ " • -'_._

government, security

system _.,,_ _.

,

_orces

mon.th

payroll

workers

voluntary

saving, ,...,_.,

•

especially

if an

workers

a£fects

reasons_

not _oncern

saging

¥irs._

adeq_atel_y._escribe soc_o-eoonom_c

economically notably

mc_el"

and

extent

of

and

_avin_

therefore

• ' see

and

advanced

m_dels,

the

the

saving

had good

cultural

_a_r_n•(_19S2-): '• :

the

case to

of save , .

several

needed of_ople

.that can who. 'ha_e I.n

studies_., us.iag...._various

model,

between conflicting policy

of

:

charac_e.r_.s_ti_s..

"short-horizon

for

a

with .the w_y ._.soclal

behavior

model,"

bases

_.,

compulsion ;

itself

"life-cycle

produced

is

_

countries,

the association

it

regardless _' .

In

a single_h.eoryls

the

..

income

it

behavior, ofi_individ_a.lS_or

of:.ail,

the

social ;

Since

[ L

arises.

the

their

saving

less '...[

to

._.

of

may emerge.

have

emergency

'This _ pape_ _does

diverse

that

life.

._

there•

saving _ _ , because : ..

portion

postpone,

that

a "pay-

p_ivate -.,,_.

",i"

circumstances,

not

. , .

working

cannot

since

" ",

argued

national . .'.: ,' .

'_""

economic

.security

be

a certain

during.., their

concern

scheme,

the

from

eve,

this.

_

tosave

tax, "

Under

"helpsincrease _. '!., .

":.

same

"reserve',

._,_, .,

members

e_ery

the,

utilizes:a

It may

_

share

of saving

sector.

' _._._,,

the

not

social

the multi-generation to

security

results.

planning

determine

and

They

the

benefits are

foEmulation.

not

- 57

second, the

even

if we

question

attempt

regarding

Philippine

case,

Census

Statistics

-

to do wh_ich

existing

data

similar model

studies

best

compiled

by

to

resolve

describes

both

the

the Natlonal 'i

not

and permit

designed

such to

kind

answer

and

the two

of

analysis'

the

problem

social

security

A is

survey

system_

_/o

specifically

needed.

,owner,

the

i

return main to

on

this

concern

undertaking

is with

determine

the

the

extent

Is

unclear.

mov4ment of

the

of

capital

effect

of

personal

saving

is

important

so long

personal

saving

due

to social

security

public

saving.

In the

Philippine

Lastlye

sinee:@hr

stock,

social

as

securlt9

the

decline

i-_ not

case,

a St

_'_ih

offSe_

however,

on

[by

the 4ecr_ne

|

in personal

saving,

is

to

offset

he nue

a study

benefits

the of

a certain on

and

important.

the

Table in

the

degre_

of

is, due

to social

secur_ty

by a rise

in public

saving;

soq_ai

se_%_r!ty

between

behavior

following

contribution

there

relationship

saving

The

loanable

if ever

the

of

ind ividu ._l.s is

discussion

will

social

security

the

importance

in_tead

system: to

V.I

describes system.

Total

of

system of

the

assets

6ociai of

flow

comprise

the entire

between

financial

Its

so¢ _al

:

7 to 9 percent system.

seCur_ÂŁy

the

,_ '

assets

describe

funds.

f inanc ial

security

i_Ss

of

:_i[ e ,

the

share

tOCal

in _otal .,'

assets

is

system

which

llfe

even

; znsurance

averaged

bigger

includes firms.

19 percent

than

that

more than

of

The

annually

the

one

hundred

growth during

private

rate the

:i"S,_&nce

life ,0ÂŁ

period

and

_ i_S

:,on_ sets

1976-1983.

- 58-

TabZe v.l ASSETS

Year

1975

1976

OF THE

FINANCIAL SYSTRM, PHILIPPINES= (In Million Pesos)

Total Financial SYstem

Government Financial System

969674.00 (:I00.00) 113,959.30 (!00.00)

,..

1975-83

Private Insurance: System

Soc ial 'Security Syst ::_:. (GSIS & SSS._

57,880.00 (59,9)

4,22-4.5 (4째.4)

7,162.16 (7.4)

77,370,00 (67.9)

5,230.1 (4.6)

10:.,148.46 (8.9)

. ,

/.-

1977

112.9,644.00 (I00째00)

83,650.00 (64.5)

6,16.7.5 (4.8)

11,483.80 (8.8

1978

162,562.40 (i00.00)

101,750.00 (62.6)

7,803 o1 (.4.8)

13,2].5_ 2!. (8,.i:)

1979

203,613.20 (I00o00)

128,160.00 (62.9)

8,955.1 (4.'4)

15,623.5t (7.7 )

1980

247,768.70 (100.00)

161,140.00 ' (65.0)

9,997.4 {4.0)

18,5_.2_ 7_; (7. _ >

1981

289,296.60 ' (I00.00)

181,380.00 (62,7)

11,333.6 (:3.9)

20,902,_5 (7.2)

1982

343,970.00

235,580.00

13,715..7

25,i45_17

(i00.00) 1983

Note :

418,091.40 (1.00.00)

(68.5) 305,910.00 (73.2)

(4,O)

(7.3)

13,715.7 (3.3)

28,546 _6_:' (6.3)

Figuzes in parentheses aro percent of the system. It does not add up to total because are included. .......

Sources'= N___ura_Xes_arch .stud ies

(1904) '

"

' _

total financ_a_I not all syste

-

As

pointed

security the

out

system

years.

invest

The

funds

not

worthwhile with

has

to

(I) (2)

any

bank

or

of

to meet

that

the

where

to

for

_:e

doing

the

0

in

De

of

more

the

fu_s. in

_the

of

the

securities

in

Philippines; to

permanent

is

specific

securities or

to It

invested

or

advances

construction

the_

investment

_leposits

business

through

allows

is

boDds

in_e_'est-bearing

Social

obligations.

its

a__

the

reserves

SSS

charter

plac_

interest-be_rin

Government

and

current

SSS

fund_

section, large

GSIS

interest-bearing

government; domestic

earlier

accumulating

needed

excess

tollowiD_:

the

charter

to

Accordingly,

loans

been

note

regard

in

59-

(3)

the

National

toll

bridges, <

toll

roads

housing

or

loans

giving

to

priority for

and

other

(6)

secured

by

other

investment its

_f

Board.

funds

reasonable

Before follow sss.

to

be

term

mortgages revised

its

excess

Note

that

high

return

on

GSIS funds

both

on

at

their

is

(5)

employees;

and

investments

Charter

stipuiltes

left

same

to are

social time

Credit

covered

collaterals,

whose the

projects

estate

systems

projects and,

to

direct

housing

projects real

(4)

groups;

loans

income-earning

the

and

flow-income

short

in development

expected

buildings;

employees

the

small

first hand,

office

covered to

facilities

the

government

the

would

ÂŁhat

discretion

required rate

on

of

to

of place

retUrn

give

is

them

a

used that

to of

investments.

the revision of its a specific investment

charter in guideline

1977, _SIS simila_ to

- 60 -

The

magnitude

security

system

gleaned

_rom

between

9

of

_o the

Table to

its

the

soc,ial

.Security

savings

can

system's

contributions

savings

ranges

loans

same

can

be

comprised

outstanding

I_-82J._ , can

of

However, fOUnd

be

between

pop, folioof

in I0 to

the

entire

perlod.

_y_ÂŁe_'s

impact

frola Table

V.3.

(payroll

social

funds

portfoiio.r@gged

the

be. observed

frQm

total

investmen!us

during

the

outstanding

the_-period

I_s-investments to_al

of

loanable

contribution

system

The

of

loans

during

18 :percent. of_ th_ financial

of

relative

investments.

flow

Its

11 percent

biggest

Contribution

total

V.2.

_:f_aac_l..."_s_em

the

the

tax)

on gross The

in total

7 to ]I percent

during

domestic

share gross

of

the

domestic

the period

1962-

1983.

Tables

V.4

an_

of

GSIS:aftd

SSS,

of

sto_ks

and

Note

that

issued or

by

the

behave

more

investlble

former

over

summarize

respectively. bonds

private

taken

V.5

at

On

conservatively. are

has

consist

most

by GSIS.

funds

GSIS

investment

the exp_h_S_ of

mainly

firms

the

deposited

of

the

Increased real

of

which

the

estate

two

share loans.

securities

recent!y

hand,

A significant with

the

private

were

other

preferences

SSS

acquired seems

proportion

of

to its

government-owned

3/ Earller years could not .be included since Bank started reporting loans only in _977. the Central

Bank

reported

statistics

Q_

the Central Before that,

loans

granted.

-

61

Table

-

V.2

THE S_AR_ OF GSIS AND SSS IN TOTAL INVESTMENTS AND LOA_S PORTFOLIO OF THE FINANCIAL sYSTEM

짜'ear

I nve_,tme9 ts Portfolio To_ai(_M_ (%) Share of GS[_ & SSS

Loans OutstandinQ -----To-q/a_) -_ (1%) S}_e of GSIS & Sss

1977

14,143.2

i0.0

63,447.2

Ii. 4

1978

17,324.5

9.9

_I,021.2

IU.4

1979

21,703.3

16.9

99,418.2

8.6

1980

25,142.9

18.0

!15,227.2

8.7

1981

30,46_

15.6

134,193.6

1982

38,118.3

17.4

154,359o

Sources:

06

Central Annual

Ban_Statistical Reports cf GSIS

9_ 6

6

9.2

Bulletin, !_83; and sSS, various _{ears.

,- 62 -

,ab,.e V.3

F_C/AL:SELIRITY SYS_ CI_IR/o_ZII_ IENEF1;_,

_ajmem

_3

,%..,..vin_s Pr_t_t

2"_.._

r_.9

_.1

:9793

7.i

1.I

a.e

e,3

SP._. _

H3.,5

_TZ

_.,74¢

iL7

1.2 "

_-.5

_,4

3,,_

e.._

a,

S_._

,:_,,,,

. ..

_74T'/.

tO.a

7e

.'_7.9

igt.Z

._7

_i

I_.4

I.S

i,@

_$

71

_,5

_._5. 3

5_3

4%11

1_i.5

I,_

4,_

_.5

7_,

t676._

773,2

_

t3_tl_

E,3

13.

;._

,t

77

I_.

_. _-

P-//_

I_

7,9

1._

3,4

_,5

7_

_.6

tin.6

_

IT/_

&$

1.3

_._

_,_

_:

-

8:

3_.8,_

I_59,8

47265

63 -

_,

'

?.7

z.2

3,_

_._

-

banks,

Samely,

the

Bank

of_the

the

for

•development

substantial

-

Philippine

Development funds,

64

amount

National

Philippines

of

(DBP),

money

directly

There increased

and

to

the

is

no

doubt

the

of

flow

Security

Social

assured,

work during

to of

consequently

cas

also

to

the

turn

use

lends

a

national

retire an

economy.

severely

reduced

it indeea

effort

at

The labor

has

financial

significant and

i_s

development_pro_ects. has

helped

this

been

made

accelerate issues_

the

but

t}_ey

paper.

decisions the

supply social

age

labor

le'isure

Itmay so

long

income which

workers

of

time.

and or

of

amount

minimum

supply

a

system

of

an, early

labor

the

government

important

life

acceptable < . .

Zor

system

Supply

and whole

the

has

affects

reduces

growing

the

Labor

even

to

Or

and

of

contributed

used

purview

corporations.

security

funds

be

the

their

social

funds

are

security

to

the

has

whet_er

fall. beyond

Social

people

it

process

consumed

it

government

loanable

investmen# and

development

regard

of

that

the

efficiently,

B.

that

non-inflationary

instrumentalities

already

nonfinancial

iSpecifically,

Whether

in

and

:i

government

amount

(PNB)

which

projects,

Z

system,

Bank•

with to

induce

more

they

are

as

_supP0rt.

is b*dly financial force

be

This

needed cost

by of

a a

participation, .[

espe_ially be

among

insignlficant.

the

middle

aged,

*s certai,ly

not

going

to

Table 9._.

(in$illimpt_os)

_i _'v LOam

_

_

a_,. 7,

7_,"

_',_,,_.

:_ 9

_'_ _

__ _

) ,:',,

:

Z_:.,_ed i:/_ ....

_

_

'

7-

--

"

__s_ _ .

_

_

-_.

TableV,,5

+J3_SP_ I_ QPi_ 1973-1963 (InPlilliem PlmOS)

•

.....

- :_sT+ .._, -

-

•

_

+_9'm _3

.........

_:_.

--

..

' i+7++' lm_S •1_-_, ,:!+'rx ++ _s_ _

--

_K

"

_ _

_.'i

'"

.'-

1s79 , lane

_

......

"

,-sam- m "

_

m3

•

'+

"

=

+., -

_/oSp ._ ,

•P.3_a sm.t (t6) _+)

_+ (m

_m.vi_ _n+

_iv+te _-_+ti_

m.3 t_)

1_1

(_)

(E31

431,8 (_1

5I_,5 ¢_t)

511,1 133)

55P+4 1391

I_-._

14(L8

ti_

m)

_.4 t++

98.3 ta)

+tin:

t:!'

+ •

_e:

..+ ,

Fig+r_im_tmmis

Scm,'ce_'+_ P

¢nmai_s

w.3 _}

m.9 (_1

P,o_i.,_ Lo_._

tm+.l e_

I_,_

r+.1 m.1 (a_

(_)

(i_

597.9 1251

667.7 5_)

816,0 IdOl

9_3.9 _1

325,1

396,+ -_.,5

i_,6

_4,3

_5,+

:t_+:

+_+)

tin+

_

" +.3 _++

I_.+ ( t?:

159,6 •iT+

I_.5 15}

t+m+

/

,tese,,z l:ml,? Ires.e 31_e _ 148)i PJ__ ;M)

:: (m+ +.

IP_3 ($

c.tm].. ++m;) +l+m+ _-tiN+

+-. +.-

151.+ 141

t+n+

+ __

at, _

_

r

tl_-,i'_JB_}m,+c l_ ,.%u__ P+odsinG .;:_r_.'_e(:97_-_i

mm.etoo6+ m+sm..6 toO.3

(&) 11_,8 _ .

m

1_1

(Lr/)

(e?)

(L_/)

1_1_ 1_1

I_P.9 I_li_

17_,! 118)

lgU.5 117)

_D,+

®

:

I_58.7 131

_+m;, .-

_0

_i

901,5

DB,_

:m

fi_:.7 .+ lO_.O |Z) . 111

_,+ 111

39_i,3 131

.t_m>

tsm> ,!+era (lain+

:.

_ ®

_ql._ 1_

m

:

.

--

are_+'+foiio._ar_

_m

+

am_,3 ],.,i,smU44_5.t !l,7 TuU f+i_ 1_) ]+iwi:i +_i6} fs_

+.

°+

.

...

.

ud_+ 13}

o,

_:67

There

are

or withdraw they

have

Second,

three

their

supply

already

finally:

may

retirement

This

the aged

but

called

the benefit

people

labor

from

age

• p_rmanently • ! market. First,

the

to work

is called _are

This

retire

of compulsory

ilke

benefits

income.

among

why

the not

benefits.

pre-reti_:ement

of

reached

retirees

retirement

reasons

not

the

retirement.

to en_6y

fully

the

earnings

test.

And

substantially_below

encourages

reti=ement

quite

different

among the younger ones. •4/ e_fect. Retirement policies !of

from

compulsory

for

years

service.

not

of yet

case

in

of

employee he

the

SSS, may

has

•

semester

age

60

reflected social replace

service

at

age

in company

security

may

and

for

age

at

least

he may

be

allowed

the

15 years.

65 years

regulation

age;

exposition

has :

_O L

the

However,

an

so

long as

prior

to the

may

have toward

and [thiS

gets

the preSenCe

acceptable healthier

15

I,

attitude

Moreover,

clear

,

is

employee

employees'

younger,

are

,

the

retirement

a

with

contributions

it socially

.

65

60 or

policies.

worker.s with

(1977)

of

This

normal

find

GSIS

is

retirement

compulsory.

120 monthly

employers'

65 as the

See Munnel concepts.

service

is l>ot

the

GSIS,

65 years

if at

retirement. both

aged

age

to complete

retirement

of

or

15 years

at least

conditioned

_t

However,

retire

paid

For

Only

This

,

SSS.

_n employee

completed

continue

not

also

•.,

the

_or

flrls

and

of

of to

better-

these

-

educated early

_orker_&,";Thls

68 -

practice

_have

se_::tne

retl_emeat. _

The.-..,Qar_.nO_: ,, ....... .

.test'_,.

dif.fioult_r,"ret_rees case

if

to

• " '

' _

0£,_._,,

'_

"

::"

ful_y

re.enter

'

_f ,_a ..¢_e_ioner

..:..".i

corresponding

to the unexpired

:n _ddition,

labor ".'

'_is/her

pension

'

•less

' .....

than-65

,"."

years

that

'

""

_t

_£s_ou_

' '_"

_

"

'_

,

"_]"

,,

,

,

oAd.

,.

-

'

.,'

portions

,,

"_we_

t

of

an.old

the ,

.

alump

(

'

sum is

lump

than!_his:_SiOe,

' "

_'

.

,

,,),., •

'!'

"',

" ! '"

.

betng

age pensione=

who iS

.

,,is ,.,...

.,

/

subst_ntial

-._.

. _.. ....

jo£_ing

_'

in

X_,._hecase

' _¢ead,_of

¢_uctton; ,

_S the pensio_e_.,froa ':_

'.

cove_ed by the

be _uced,

But

,. ,.'

the

_ .._

pen_O_ _-` shaXl_,:i.Oe_,.uspe_ed,

shall

suspended r ._uponlre-_plo_ment

in

_ .,..._.

the: d_ffere._..,_ monthly

it

in full to GSIS the _unt

unless he re'elVes _a compensation

SSSe

makes

fo_m_,

"' i ,:,

who h_s receiwed,

he/she shall refund

sum.

enforced., , ...

the

" " "

re-employS,

of

, _eaa,,sor

the

.-,,

1

..

"

labor

"

fore: ag_,,_i_r. :, "Soc.iai'. secu_:i_y enough not

so

that"those

to-extend

earlier

repla¢_e_et_¢

age. all_¢e..,

social

secur_'ty

of

ea_s.

ea_,l_ .ret_:_¢_.?n,,t.,

to

remain

Th_s

is especially

_its .._rat_i, ty..Retlrem?nt.Benefit,

:_¢ome

.,t_nere: se__

have been aided

labor

by policies true

any

" =eplate:

benef,£t_

in< the

opt

_,_

_:._otm.::_n-..the

pre-ret_esmnt Thus;:

for,,wo/ker_ ra, tj_o,;.jalr

ret._,_eat_

working

' prOport_i_:

among low-income iincen.t_y_,,

Who quali_y,:fJ_¢

theit

"_eotiOn,

substantial

benefits ma_,,.have,bee.: at,t_o_.£ve

:

a

eSpe_ii_lly _:

forge. that

W_th GSIS.

officiaio_emPloyee

:.l_ttle •Rtgh allow Under

•_.... 69 -

•regardless least

of

20

years

continuous. may

of

Thus,

retire

also

.age may.,retire

at

who

40.

.have

ne has

last

joins

3 years

the civil

Annuity

as.ea@iy been

rendered, of,which

service

(Pension)

"aS age

satisfied

the

The

amon_

possible

the

security

aged have

Junction

reasons_ vould

been

to refer

Tai._le.V.6 '

_nd sex

to some

gives

_B_nef_t

for

years

.persons

included

,_E_Ea,_in

empl,_e_.. .... (_see

force

t

participation .,. •

,

the presence

It

of

is appropriate ' '

at

'

labor

se_ected

data

because

are of

force

particlpati_nl",; _.ates Note .•"that .the" _976

years.

not

comparable

a change

in the

"with

this

£hos'e.r,of

in the referen_e,_

labor. •force and

Despite

pattern

in .l_bor force over.

a_Verage

Age

working

The

1•976

yield

sever_l

drop

in labor cohort.

this i.,

•.

_vidence.

the

four

period..

,a consistent

.

sovial

"Of

the change

difference,

in•_the

,one can

Observe

-.

age

Plan

_. ,..,_.. .

earlier

and

20

" 'i.

survey

reference

!abor

discussed.

i

19_4

why

dec,i_ine with

•

by,,,,.age

drop

are

at age

52 proV_ed

by

at

IV.2).

"

and

the

GSIS.'

retirement

qualifications Table

one

age

allows

service,

provided

from

and

be

an

that

is,

occurred

important

at

the

sharpest:

age. 65

milestone

Meats

,in

the

in .the Philippin_s,.

19S4

data

i_teresting force

the data;

participation

65 may life

:__ ,_,; _ J".,;

on_iabor

insights,

participation,

' It means

that

force _ partiClpatlon First,

is observed

a signi'flcant

a: pronu_nced i,

pro_rtion

:;_,i.,"55-64 of

the

- 70 -

relatively

younger

from the and.

:

withdrawn

their

One?freight attribute some

by

provided

in

have

.

.seems to.be

data

retirees

peQple

.

market.-i

there

rough

.,

•

1983

truth

GSIS,

•retired

supply

it to so_ial _ security,

tO

it.

about in

,labor

Based

on

1983

83 percent at

the

a

ve_?

of-',the. 6898

age.

between

55

5_/ and

(nee.

•64;. years

V. 5).

proportion

of

retirement

'policies

and

have

encouraged

system

.may.

caution labor

must

women

Table

be

force

between

exercised

social

- 57 _ercent

of

may

retired . economic

difficulty

among

might

labor

supply

_'Unfortunately, isolate

the

force

factors,

such

a job, helped

lack

of

effect

social

data

of

covered

security

on

labor

pension

In the

f_.rst

only

about

have

Others

children,

been

at work

to withdraw

at a relatively

factors

of.

income

an

50

plan. _ " Secondly,

decide

preve,ts

the range

Table • IV.I).

aged

force

in

aoe

early

analys!_

from

-stage.

effect

could of

,r.

,,:.And

partlcipatlon.

their

that

the _:

social

Howsver,

de cllne

security.

could

those

! Thus, security

_

whose

etc.,

market

greater

than men.

the

as rising

the

_a

retirement.

(see

a private:

from •the

Of

system: has

have

have

age

those

to social

labor

in finding

which .t/

an early

in attributing-the

security

the

expected,

early

participation

the

other

at

benefitsl

55 and.i:64 solely

place,

who

retired

As

lastly,

[

life

SSS

expectancy

could

not

may

have

provide

us

influenced

the

same

workers

_oi_:retire at an

information.

Age_,p

te - 2+

F.jct_er 19!F_5_. BothSe_es _le Ferule

_+

+7.9

+._

A_q,st 1_ _, BothSexes _le Female

_.+

+Lz a_a

RQe_p

++- i+

1_6 3rdQ,ater BothSewes _ale Fmle

++.+

++._

_,+

1984_,r_l-Q_rte_ -_oth_Sexes_le Fe.lle

++++

+B.+ _++ t

a_ oYeP +5 - _4

7@++

9:/.+

_.I

76.9

_5,2

59,2

a._ over

4_.1

6,?.L. 6

_i_3

+1,9

_t,_i