Should you pay the maximum contribution to get higher SSS pension?

Paying the maximum SSS contribution is conclusively the best way for anyone to experience the topmost of benefits that the Philippine Social Security System has to offer including higher SSS pension.

But if you’re only after the pension benefit that you will get from SSS upon your retirement, there might be a wiser alternative in order to maximize your SSS contribution.

• READ: 13th Month Pension ng SSS ngayong 2018, sino nga ba ang makakatanggap?

First, let’s look at this ‘controversial’ loophole:

SSS Circular No. 2015-007 states that a Self-employed or Voluntary member, who is below 55 years old, shall be allowed to change his/her MSC or Monthly Salary Credit without limit in frequency and in number of salary brackets in a given calendar year.

Does this mean that you can pay the minimum SSS contribution until age 53 and increase it to the maximum rate at age 54 or 5 years (60 months) before your retirement age?

Well, I guess this is where the “loophole” is coming from.

• That you can actually pay the maximum rate of P1,760 or whatever the maximum amount would be, 5 years before you retire.

At least that’s how I understand it. I may be wrong, but this video might back me up in my stand on this issue.

Why pay the maximum rate only in the last 5 years before retirement?

Because one way of computing the monthly SSS pension is by getting the average of member’s contribution for the last 60 consecutive months or the last five (5) years before retirement.

In short, paying the minimum amount until you’re 53 and shifting to the maximum contribution when you’ve reached 54, would give you the same monthly SSS pension for a lifetime with one who contributed the maximum amount all throughout since the age of 20.

Amusing enough right?

But logically, what’s behind the curtain is what one should understand.

SSS Circular No. 2015-007 states that a self-employed or voluntary member (including an OFW and non-working spouse), who is 55 years old and above, can only increase his/her MSC (monthly salary credit) only once in a given calendar year and by one salary bracket only from the last posted MSC or Monthly Salary Credit.

Meaning, you have the option to increase your SSS contribution from the minimum to the maximum rate starting at age 54, but never when you’re already 55 years old.

Remember that SSS has other benefits too aside from SSS pension.

If your sole purpose of paying SSS contribution is to get your SSS pension during your retirement years, then paying the maximum rate 5 years before you retire might be the best option for you.

But, a notable suggestion to hand over, it’ll be conclusively best if one will pay the maximum amount right from the start of her membership. Why?

When you’d go for the maximum contribution:

• Better chance of getting higher total monthly SSS pension;
• Greater lumps of the amount given to cover other SSS benefits including sickness, maternity, death, and disability.

Yes, one can possibly have the same amount of monthly pension with the lower payers, but there’s this significantly greater total of all the other benefits that SSS covers in which one can take advantage of especially when the need arises.  

And by the fact that you can only receive the utmost of benefits by SSS if you would be paying the maximum contribution, also assures anyone that a ‘separated’ money for a certain important event or plan would not be attached to as a payment for a hospital bill due to an accident that might possibly come in one’s way – in which no one knows when.

So, would you go for the minimum or maximum?

At the end, deciding whether if maximum contribution is much worthy than paying minimum contribution is dependent on your goal and capacity to pay especially if you’re a self-employed or a voluntary member; while an employed member doesn’t have that option since his SSS contribution is automatically deducted from his salary.  

But going back to the main point and generally speaking, with almost all vital issues concerned and with an objective view that covers the ‘must-recognized’ essentials as discussed above, it is all proven that paying with the maximum contribution is significantly better than paying the minimum.

Furthermore, every cent dropped on the SSS is not just an addition to your future pension but rather a concrete block for the foundation of your secured tomorrow.