A person has to work for his own personal security and his family’s household security. Securing such security is a personal and parental responsibility, not government responsibility. Thus, savings for the rainy days someday – by how much, for whom, on what services, how long to save and contribute, when to claim, where to claim – should be individually tailored because each individual has different needs and different priorities.
Person A with three or more children will prioritize education and health care for the kids; Person B with the same number of children who plans on home-schooling will prioritize a beautiful house and cars; Person C who is single with old and sick parents will prioritize healthcare for the older folks; Person D who is single with deceased parents will prioritize big pension for his/her foreign travels or lavish lifestyle someday; Person E who is either single or has family but plans to migrate abroad someday will prioritize portability of his savings and the services that he can enjoy with it; Person F who jumps from one job to another wants unemployment allowance and healthcare; and so on.
With increasing globalization and greater mobility of people across national borders and across continents, portability of savings and contribution is becoming more and more important. A person who suddenly feels the need to migrate elsewhere for whatever reason should have the flexibility to bring with him/her the value of his/her accumulated savings and contribution for both personal and household security. When such accumulated savings cannot be portable, then the providers of such security have the parochial assumption that people will not be mobile across countries, and the evil intention of utilizing such savings for their personal interests when the social security contributors have finally migrated and not come back or come back but too impatient to claim the would-be services because of complicated procedures and bureaucracies.
Here in the Philippines, social security is a business monopoly of the State: the Social Security System (SSS) for private sector personnel, and the Government Service Insurance System (GSIS) for the government personnel. Both financial institutions are State-owned and managed, even if all contributions are from private savings of the employed people.
A person employed in the formal sector, whether in private enterprises or government agencies, would see his/her monthly pay significantly shrank due to four different types of automatic deductions: personal income tax, housing tax (PAG-IBIG contribution), health tax (PhilHealth contribution) and social security tax (SSS or GSIS contribution). The government does not call the last three as "tax" but rather as "contributions". Contributions by nature, should be voluntary. Since these are non-voluntary payment and are mandatory collections because all employed person are coerced by various laws to become members of those government financial institutions, they are essentially a form of tax.
Those employed in the informal or “underground” sector are somehow lucky because their monthly income is not subject to those four automatic deductions and hence, they will have their income intact; they will just have to device some scheme to put up their own savings for the rainy days someday. The problem with this is that there will be little or no incentives for them to become bigger entrepreneurs someday because business growth will expose their heads and will attract the eyes and attention, and consequent regulations and bureaucracies, of the various government agencies that make those mandatory membership and collection.
Since private savings and contributions have been made socialized and collectivized, managed and controlled by the administrators of the collective, the State, then there is danger that said savings will be subject to socialized robbery. There is the built-in malady for instance, in the design of private social security: both the fund administrators (the SSS President and other officials) and the person who appointed the chief fund administrator (the President of the Republic) are not even SSS members (they are GSIS members), and yet they have almost full control of where the bulk of the accumulated private savings will go.
Thus, putting private citizens' pension and social security money into direct control by the State is not only risky. It is wrong. The SSS being funded by private sector employees and entrepreneurs should not be a State corporation. The State has already collected a big share of the employed people’s pay check, the personal income tax. So when the State further dips its hands in after-tax savings and contributions, there is a big likelihood that some evil intentions are being designed. Because by virtue of a financial institution being State-controlled, the appointment of such institution’s officials is subject to politics. The decision of where the savings will be invested, who can borrow big amount and who cannot borrow, will be subject to politics. Thus, all heads of SSS are thankful of, and accountable to, the one who put them there -- the President of the Republic, not to the members employed in private enterprises who were coerced by social security laws to contribute to the funds.
In a sense, this somehow explains why all past SSS administrators were not raising the issue of politicized appointments in that state corporation because they themselves were beneficiaries of such politicization of private funds’ pool.
Recently, there was wide public confusion, if not non-acceptance, of the appointment of the new SSS administrator. The incoming administrator who was then occupying another government agency has approved a supposedly government broadband network deal that involved US$300+ million, despite his earlier public admission that there was an attempt at large-scale robbery and corruption in the said project. When the controversy became too hot to handle, the project was shelved by the President. When the Senate conducted an investigation, the incoming administrator shut up and could not be compelled by the Senate to further talk when most of earlier evidences gathered by the Senate pointed to the President as the master-mind of the attempt at large-scale robbery.
What is noteworthy at this turn of events is that public discussion and debate on social security has been focused on a few personalities, namely the incoming SSS administrator and the President of the Republic. Although the issue raised – morality and integrity of the administrators of private savings – is indeed valid, the other issue, a bigger one for me, of State monopoly control of private savings and contributions, was relegated as a secondary issue or non-issue at all.
I personally know the incoming fund administrator because I was one of his staff for several years when I was still working at the House of Representatives in the 90s. And I can say that the said official is not exactly a man of high integrity. But as I have pointed out above, the appointment of whoever as fund administrator is a smaller issue compared to the fact that an institution that was built up by private savings is fully State-managed and controlled. An angel President will likely appoint an angel fund administrator and other government officials. A President who is a thief will likely appoint a thief and politics-loving fund administrator and other government officials.
One indicator or characteristic of a monopolist is lack of transparency. An enterprise that wants to get as many clients and customers as possible will strive to be as transparent as possible because people want to be assured that they get value for their money, that their savings are invested in productive projects that will give them good returns someday.
In the case of the SSS, its website alone is among the most unreliable sites in the world. For a fund with more than 27 million individual members and PhP234 billion (US$5.2 billion at P45/$) of investments, inquiries by phone or personal visits by its millions of members is costly and very inefficient. The maintenance of a reliable website therefore, is a must. But if you visit www.sss.gov.ph, either it is down or it shows only the homepage; and if you click any of its sections, it takes several minutes of “loading”, you wait for several minutes more and… voila! “Page Load Error” will show up. As of this writing, the website is down.
Many ordinary members just want an SSS ID because this is being asked or demanded by other agencies. But getting an ID alone is very time consuming. In my experience, getting an appointment for ID pictorial alone takes several days. Waiting period for the pictorial (digital camera) and e-signature was about two hours, from the time I submitted the ID application form to the time I finished everything. And waiting period for the ID to be delivered to my place was supposed to be two months, they said. But my ID came after four months!
Other SSS members though were more unlucky. Some waited six or eight months before their IDs were delivered to them. Others are worse off: they have waited 10 or 11 months and still they have not yet received their ID! See those sentiments and experiences on getting an SSS ID and the unreliability of the monopolist’s website here,
A monopoly is often characterized by wastes and inefficiencies. This is because the administrators of a monopoly know that they have no competitors, so that their clients and the public have no other option but to patronize them. Unlike private enterprises like insurance companies who have to be extra courteous and friendly to their clients since the latter have the option of leaving them and go to the other competitors and players in the sector, a monopolist can be callous to the complaints of bad service by their clients. They can even arrogantly brush aside such complaints and demand for better service. That is why monopoly is bad and we should break all monopolies or oligopolies in the entire economy, including social security monopoly.
The social security sector should be deregulated and demonopolized. SSS and GSIS should be privatized since their funds come from private savings and the State has lots of money already from various taxes, charges and fees, mandatory contributions, and sale of its other non-performing assets. If privatization of these two financial institutions is not possible in the short-run, so that they remain as government-controlled corporations, the sector should be deregulated nonetheless.
Deregulation and demonopolization will allow the entry of new players and competitors, and membership to the SSS and GSIS should not be made mandatory. When these two institutions wake up to the reality that the public has other options, then their inefficiencies and wasteful habits, if not arrogance, will be tempered. Of course anyone can retain his/her arrogance, fine. So long as the public can retain their power to choose, then the arrogant and wasteful will slowly find themselves out of jobs, out of relevance in society.
And leadership and Presidency of both SSS and GSIS will become a secondary issue to the public. The President of the Republic can appoint an angel or hoodlum, it’s up to him or her. What is important is that the public have a choice whether to entrust their savings for their future personal and household security or not to political appointees.