Social Security System: Quo Vadis? (Where Are You Heading?)
This paper aims to look at the financial performance of the Social Security System (SSS), the government's social welfare program for employees in the private sector.
SSS faces the risk of a fund deficit in the near future due to poor operating results. The latest actuarial study done in 1999 indicated the life of the SSS to last until the year 2015 and reserves expected to decline starting 2008 even without benefit enhancement.
This study reviews the financial performance of the Fund for the seven year period from 1998 to 2004 to see signs of this. Performance was examined along the lines of membership, benefits granted, compliance with regulations, and financial performance.
The study showed that SSS faces the risk of fund deficit in the near future due to poor financial performance, especially with benefits consistently exceeding contributions. SSS has been maintaining an actuarial reserve below what is required and this poses a risk on its ability to pay future benefit claims. However, the deficit has been narrowing since 2002. While the financial viability of the SSS is questionable, the situation is not hopeless. With a good management and a resolute resolve to collect members' contributions, pursue sound investment decisions, and institute operational reforms, the Fund can survive.