Finance & Legal Best Posts in Thread: SSS-pension

For those considering enrolling their better half in the Social Security System in the Philippines so that she can avail of the state pension when the time comes (there are other minor benefits but the state pension is by far the most important).
I have read the SSS law (link), and my conclusions are:
1. Yes it makes sense to enroll, if she's not already enrolled (compulsory) because of a paid job, however
2. The way the system works for voluntary members (like a housewife would be) is rather arbitrary, with discretionary rules.
This leads to the following for a partner at age 40:
If you pay the premiums for the maximum "monthly salary credit", currently 13% of 25k a month, but this will rise in 2025 to 15% of 35k a month, so around 5k a month in premiums, then there's basically 4 choices.
a. You can enroll now and pay for let's say 25 years until she turns 65, then she would get 300+1000+50% of the 35k=18,800 peso per month pension.
b. You can do the same but she "retires" at 60 (so pay 20 years). Then she'd get 15,300 a month.
c. She can enroll at age 50 and pay for 10 years, so retire at 60 and get 15,000 a month.
d. She can enroll at age 60 and pay for 5 years, retire at 65 and get the same 15,000 a month.

My conclusion is that under the current law it seems like the most economical plan to start putting 4k a month in a savings account now, then enroll at 50, and pay the premiums for 10 years from the savings account.
The other options are simply not as good.

Obviously they should change the system to a much more gradual change between options, so individuals can't game the system anymore, but it is what it is.

 

For a 30 year old, in my example of paying for the maximum "monthly salary credit", if already enrolled and paying she would get 300+1000+60% of the 35k = 22.300 monthly pension at 65.
The thing is that the difference with what you get when paying just the last 10 years before 60 simply doesn't justify to do that. Much better to get a savings account at a solid bank and put a similar amount as the SSS premiums there, then enroll when she's 50.

Caveat, you only qualify for a monthly pension at 60 with the full 10 years (120 months) of premiums paid before that birthday, so best to enroll 1 month before turning 50, not "one week after".
Another thing is, yes there's a minimum pension also for low income members with a much lower monthly payment required (currently 13% of 3,000), but the corresponding (minimum) pension is 3,400 a month only, which is below subsistence levels.

So, in my view, assuming you can afford that, much better to stop paying to SSS now, and instead put money in a savings account, which she can then use to pay the maximum premiums between 50 and 60.
Alternatively, if the lady would get upset about quitting SSS now and you can't explain well enough why that makes sense, keep paying the minimum premiums to SSS, and put another 3k a month or so in a savings account so she can hike up her "monthly salary credit" at SSS to the maximum at age 50 and pay the corresponding maximum premiums for the last decade before retirement.
Apart from generating a half decent pension (by Filipino standards) then, you roughly triple your money in 10 years that way for the first 10 years of retirement (assuming she doesn't die before 70), not too shabby. To top it off, all monthly pensions beyond age 70 would be a free bonus.