Rep. Lorenzo “Erin” R. Tañada III (Liberal Party, 4th District, Quezon) hailed the passage on third reading in the House of Representatives HB 5922. This bill, authored by Tañada together with Representatives Raul del Mar and Amelita Villarosa will grant the Social Security System a one-time authority to condone the penalties slapped on unpaid employers’ remittances.
He called it a triple mini-stimulus package because first, it provides a strong incentive for companies that have been in arrears on their principal payments for their employees’ contributions to immediately settle what is due and overdue, minus the huge burden of dealing with the delinquency penalties that have been slapped on them. According to Tañada, the 3 percent a month penalty is indeed burdensome and once in arrears and not quickly addressed, it can really pile up. So this is a stimulus package for these troubled companies, companies that, by and large, do not want to be delinquent in the first place, but because of the series of crises that hit our country, failed to remit what is due as the employers’ share for their employees contributions to SSS.
Second, he said that by providing this breathing space for troubled companies, we are actually helping SSS to immediately collect about P57 billion of the P95 billion overdue principal payments which would otherwise be difficult to collect. A lot of troubled companies choose not to pay what SSS demands of them because the penalties that have accumulated are actually bigger than the principal that they should have been paid. Of the P325.5 billion that is collectible by SSS as of 31 May 2008, P230.82 billion is accounted for by penalties and only P94.6 billion is accounted for by the principal payments that are due. Past SSS condonation experience shows that on average, 60% of those which have accumulated principal payments chose to settle what is due in outright cash. Sixty percent of P94.6 billion is P57 billion which could easily beef up SSS’ coffers. That is the stimulus package for SSS.
Third, Tañada thinks that this is the most important and immediately needed stimulus package directed at ordinary, privately employed individuals. “With collected and settled principal payments for the SSS members’ contributions, they can now avail of the privileges of a good standing SSS member – claim benefits and get loans – benefits that would otherwise not be available had their principal payments remain unsettled. That’s the stimulus package for ordinary, privately employed individuals.”
Tañada who chaired the technical working group of the Committee on Government Enterprises that prepared the draft substitute bill shared that the TWG was quite conscious in finding a middle ground so that they are able to help companies which have been unable to settle obligations with the SSS without sacrificing SSS’s financial viability and actuarial life.
“We were also quite conscious that we do not unduly reward those who have been remiss with their obligations to the disadvantage of companies who have been very diligent in making timely payments to the SSS. Those who have been remiss with their contributions would still have to pay penalties but not as huge as what the SSS charges them. The bill provides a sliding scale of condonation depending on the mode of settling the overdue SSS contributions. Those who choose to settle the principal payments even before this bill is passed into law will only pay one percent of the penalties that are being charged by the SSS. Those who choose to settle with outright cash payment the principal that is due to the SSS after this is passed into law will have to pay 5% of the penalties being charged them. Finally, those who choose to pay the principal on an installment basis will have to still pay 15% of the penalties that is due,” he described.