2016年-世界发展银行全球_Republic_of_the_Philippines_Review_of_the_Social_Security_System___Considerations_for_Strengthening_Sustainability_and_Coverage_64页_1mb

Summary of the Philippines Social Security System Review

Core Content

This report, prepared by the World Bank for the Philippines Social Security System (SSS), analyzes the challenges and reform options for improving the sustainability and coverage of the SSS for private sector workers. It highlights the demographic and economic context, the current state of the SSS, and proposes both parametric reforms and coverage expansion strategies.

Main Challenges

• Aging Population: The old-age dependency ratio (those over 60 as a proportion of working-age population) is projected to double from 12% in 2015 to 22.5% in 2050.
• Informality: Around 75% of Filipino workers are informally employed, and only 22% actively contribute to the SSS (with another 3.4% contributing to GSIS).
• Low Participation and Coverage: Informal workers, due to low and volatile incomes, face significant barriers to contributing to social security schemes.
• Fiscal Sustainability: The SSS is projected to face outflows greater than inflows in about 20 years and asset depletion in about 28 years under current conditions.

Key Findings

• SSS Sustainability: The SSS is currently on a pay-as-you-go (PAYG) basis and may not be sustainable in the long term without reform.
• Informal Workers: These workers are particularly vulnerable due to limited job security, low wages, and high levels of income insecurity.
• Social Pension: The Philippines has a non-contributory Social Pension that protects the poorest elderly, but there is a need to broaden eligibility to increase coverage.
• Income Insecurity: Many elderly rely on family support or informal sources of income, which are not reliable or sufficient.

Main Recommendations

Parametric Reforms to Improve SSS Sustainability

• Unify the old-age benefit formula for all vested members to improve participation incentives and equity.
• Replace discretionary indexation with automatic inflation-based indexation to protect retirees from inflation.
• Extend the wage base for determining benefits and valorize it based on average covered wage growth.
• Gradually increase the retirement age to 65 years, in line with increasing life expectancy.
• Gradually reduce benefits after a reform date to achieve long-term sustainability.
• Gradually increase the contribution rate to improve the long-term balance, but in a way that considers the overall tax wedge and does not discourage participation.

Options to Improve Coverage

• Leverage the SSS identification system (UMID) to provide a unified identity across institutions.
• Introduce a special instrument for informal workers, such as a voluntary, defined-contribution savings mechanism that offers annuitized benefits at retirement.
• Allow partial withdrawals for defined events (e.g., unemployment, health crises, disability, natural disasters).
• Broaden eligibility for social pensions to include the bottom 40% of eligible households.
• Implement automatic annual price increases in benefits.
• Conduct periodic assessments of targeting outcomes and benefit adequacy.

Beyond SSS

• Improve access and efficiency of contributions and payments systems.
• Strengthen mobile-money platforms to facilitate contributions and payments for informal workers.
• Enhance access to savings instruments, especially for small and isolated savers.
• Improve wage-based employment as the most sustainable solution for expanding coverage and improving income security.

Key Implications

• Demographic Trends: The Philippines is expected to face aging challenges in the next 35 years, which will increase the demand for social security and pension support.
• Informal Sector: The informal sector constitutes the majority of the labor force, and its workers are underrepresented in SSS and GSIS contributions.
• Economic and Social Impact: An aging population and low wage-based employment will increase pressure on both families and social security systems.
• Fiscal Constraints: Broadening social pension coverage may be more cost-effective than matching contribution subsidies.

Conclusion

The report emphasizes that improving SSS sustainability and coverage is essential for protecting the elderly and ensuring long-term economic stability. While parametric reforms can address medium-term fiscal issues, the long-term solution lies in expanding wage-based employment and improving the quality and quantity of jobs. The SSS identification system and special instruments for informal workers are proposed as key tools for increasing coverage and improving delivery efficiency.

Key Tables and Figures

• Table 1: Measures of informality for wage workers.

• Table 2: Elderly sources of income by household type.

• Table 3: Summary of key pension parameters.

• Table 4: Pension coverage.

• Table 5: Indicators of sustainability of public defined benefit schemes.

• Table 6: Social pension budgets.

• Table 7: Summary of elderly assistance programs in the East Asia and Pacific region.

• Table 8: Summary of SSS parametric reform packages and their impacts.

• Table 9: Financial effects of SSS baseline and simulated reforms.

• Table 10: Illustrative contributions at different contribution rates.

• Table 11: Life expectancy at various ages by gender.

• Table 12: Macroeconomic assumptions used in PROST projections.

• Table 13: SSS sensitivity tests.

• Figure 1: Projected population and SSS dependency ratios.

• Figure 2: Elderly living arrangements.

• Figure 3: Labor force participation by age.

• Figure 4: Proportion of elderly employed and employment status.

• Figure 5: Poverty headcount by employer type.

• Figure 6: Poverty headcount incidence and share by five-year cohorts.

• Figure 7: Income distribution by quintile.

• Figure 8: Correlation between global coverage and GDP per capita.

• Figure 9: Baseline projection of SSS pension system finances.

• Figure 10: SSS contributors and retirees.

• Figure 11: Select EAP replacement rates.

• Figure 12: Benefits from contributory pensions.

• Figure 13: Impact of reform packages on sustainability.

• Figure 14: Impact of reform packages on sustainability – annual current balance.

• Figure 15: Impact of reform packages on all retirees' replacement rate.

• Figure 16: Life expectancy at retirement ages.

• Figure 17: Life expectancy at retirement ages in East Asia.

• Figure 18: Social security and personal income tax rates.

• Figure 19: Projected financing gaps and break-even points for SSS reforms.

Key Acronyms and Abbreviations

Key Boxes

• Box 1: Voluntary occupational and personal pensions arrangements.
• Box 2: Matching contribution programs to extend social security coverage.

Final Notes

The report concludes that improving the quality and quantity of wage-based employment is the most critical step to enhancing social security coverage and income protection for the elderly. The SSS identification system and special instruments for informal workers are proposed as administrative solutions to increase coverage and improve the delivery of benefits.