The Social Security System (SSS) in the Philippines is a safety net Filipinos rely on. It covers individuals and families in times of need, such as retirement, disability, sickness, maternity, or death. The trust in the system has considerably increased as its 2023 revenue surged to ₱362.20 billion, exceeding its revenue target of ₱330.80 billion by 9.5 %.
In fact, in 2022, SSS disbursed a total of ₱236.3 Billion in benefits from January to November 2022, a whopping growth of 13.2% from the ₱208.8 Billion for the same period recorded last year. If the numbers continue to increase annually, one can imagine the significant benefits that SSS provides to its members.
All registered businesses and establishments in the Philippines are required to contribute to SSS for their employees. Furthermore, employees regardless of their employment status are mandated to contribute SSS. Understanding how to calculate your SSS contribution is crucial. This article will delve into the calculations and rates, which vary based on several factors.
What is the Social Security System (SSS) fund?
The Social Security System (SSS) fund refers to the pool of money managed by the Philippines’ Social Security System, consisting of contributions from both employers and employees. These funds are utilized to provide social insurance, retirement, and other benefits to employees and workers.
The goal is to ensure members are looked after both presently and in the future. The government closely monitors the fund and makes prudent investment decisions to maintain its health.
Who is covered by SSS benefits?
SSS benefits cover the following individuals, ensuring both theirs and their families’ protection against incidents such as sickness, disability, maternity and retirement:
- Private employees: this category includes individuals employed by private companies or corporations. Whether you work for a large corporation or a small business, as long as you are employed in the private sector, you are likely covered by the SSS benefits.
- Household helpers and domestic workers: these are the individuals who work in private households, assisting with household chores, childcare, or other domestic duties. It includes maids, nannies, cooks, gardeners, and other similar roles.
- Drivers and operators of public utility vehicles: this group consists of people who operate public transportation vehicles such as buses, jeepneys, taxis, tricycles, and other forms of public transport. Given the nature of their work and the services they provide to the community, they are eligible for SSS benefits to address their social security needs.
- Self-employed persons: self-employed individuals are those who run their own businesses or work independently without being employed by a specific company. It includes freelancers, entrepreneurs, consultants, and professionals who operate their businesses on a freelance basis.
Who can perform SSS contributions?
All individuals, including employees, self-employed individuals, non-working spouses, and Overseas Filipino Workers (OFWs) up to the age of 60 who possess an existing SSS number, have to make SSS contributions to either initiate or maintain their coverage. Moreover, employers are mandated to contribute on behalf of their employees.
It's important to note that unemployed Filipinos can voluntarily make SSS contributions only if they have prior employment or self-employment or were previously OFW members with a verified history of at least one month of contributions. Moreover, SSS provides flexibility for certain members, such as farmers and fishermen, permitting them to contribute at any time within the twelve months preceding their payment schedule.
What is the SSS Contribution Rate for 2024?
In 2021, the SSS contribution rate was set at 13%. However, it increased to 14% in 2023 and stands strong in 2024 as well. Of this 14%, 9.5% of SSS contributions are made by the employer, while employees contribute 4.5% of their monthly salary credit.
The SSS Contribution Schedule was originally scheduled to increase by 1% every year starting January 2023, reaching 15% by January 2025. However, due to economic concerns and public feedback, the Philippine government decided to defer the planned increase for 2024.
As a result, both employers and employees will continue to contribute at the current rate of 14% throughout 2024. This applies to employees earning a monthly salary within the range of ₱4,000 to ₱30,000.
How to calculate SSS contribution?
The SSS contribution is made by both employer and employee when an individual is permanently employed by a company. For freelancers, self-employed individuals, overseas workers, and voluntary members, contributions are made differently. Let’s explore the specifics for each of these cases.
Regular employers and employees
The SSS contribution for regular employers and employees is covered based on the employee’s monthly salary credit (between ₱4,000 and ₱30,000). Both the employer and employee contribute to the SSS as per the contribution rate (14%). Out of the 14%, 9.5% of the monthly salary credit goes into SSS contributions by the employer. The remaining 4.5% is contributed by the employee.
For example, Christina earns a monthly salary credit of ₱20,000.
Employer’s contribution: 9.5% x ₱20,000 = ₱1,900
Employee’s contribution: 4.5% x ₱20,000 = ₱900
Total SSS contributions: ₱1,900 + ₱900 = ₱2,800
In addition to the regular SSS contribution, employers also make monthly contributions to the employee compensation (EC) program. Employees earning below ₱15,000 receive ₱10, while the ones making ₱15,000 and above receive ₱30.
Self-employed members
Self-employed members determine their monthly contributions based on their declared monthly earnings. The contribution rate remains the same (14%) in their case as well. Since self-employed individuals do not have an employer to contribute on their behalf, they are solely responsible for making their own SSS contribution. This ensures they are covered under the social security system and are eligible for the benefits it provides.
For example, Nathaniel makes a monthly salary credit of ₱4,000 per month.
Total SSS contribution: 14% x ₱4,000 = ₱560
Employee compensation (EC): ₱10
Self-employed individuals, in this case Nathaniel, can contribute the total amount of ₱570 using various payment channels provided by SSS. These include online platforms, authorized banks, or SSS branches.
Voluntary members and non-working spouses
Calculating SSS contributions for voluntary members and non working spouses is similar to regular employees, whereby the contribution rate remains the same (14%), However, the difference lies in determining the Monthly Salary Credits (MSCs).
For voluntary members, their MSC is based on their declared monthly income during registration. It can range from ₱4,000 to ₱30,000.
For example, Maria declared a monthly income of ₱12,000.
MSC = ₱12,000
Total SSS contribution: 14% x ₱12,000 = ₱1,680
As for non-working spouses, their MSC is based on 50% of their working spouse's MSC.
For example, a working spouse has an MSC of ₱15,000.
Calculation of SSS contribution for non-working spouse:
MSC = 50% * ₱15,000 = ₱7,500
Total SSS contribution: 14% x ₱7,500 = ₱1,050
It is important to note that non-working spouses can choose an MSC between ₱4,000 and ₱30,000, but it cannot be higher than 50% of their working spouse's MSC.
Household employers
Household employers are those who employ household helpers such as maids and drivers. The employer is in charge of making both theirs and the employee’s share of SSS contribution, with the employee’s share deducted from their salary.
For example, a household helper earns a monthly salary of ₱12,000.
Employer’s contribution: 9.5% x ₱12,000 = ₱1,140
Employee’s contribution: 4.5% x ₱12,000 = ₱540
Total SSS contributions: ₱1,140 + ₱540 = ₱1,680
Overseas Filipino workers
Overseas Filipino workers (OFWs) are individuals from the Philippines who are employed or working abroad. They may be employed in various sectors such as healthcare, construction, domestic work, hospitality, and more. The Social Security System makes it a point to provide a safety net and financial security for them and their families back home. OFWs have the option to become voluntary members of the SSS and can continue their coverage even while working abroad.
The SSS contributions are made based on their declared earnings abroad. They can make these contributions through online platforms, accredited banks, remittance centers, or through authorized SSS representatives in their host countries.
For example, Sophia has a MSC of ₱8,000.
Total SSS contribution: 14 % x ₱8,000 = ₱1,120.
These individuals are also provided assistance services specifically tailored to their needs. This includes information dissemination, assistance in processing claims and benefits, and outreach programs conducted in coordination with Philippine embassies and consulates abroad.
Learn more: HR’s Guide to Payroll Taxes in the Philippines
When to pay SSS contributions?
SSS contributions are typically made on a monthly basis, with the deadline varying based on membership type. While you can manually handle the payment procedure, it’s better to invest in a trusted HRIS in the Philippines. It automates the entire process and simplifies the payment breakdowns, which are as follows in different cases:
- Employers and employees (monthly)
For employees, SSS contributions are deducted from their salaries by the employers and remitted to the SSS. Employers must pay the total amount, including their share, by the last day of the month following the applicable month. For example, contributions for April 2024 should be paid by 31 May 2024.
- Household employers (monthly/quarterly)
Household employers can remit SSS contributions either monthly or quarterly, with the payment due by the last day of the month following the applicable period. Quarterly payments are generally preferred. Thus, contributions for January 2024 can be made by 30 April 2024.
- Self-employed, voluntary, and non-working spouse members (monthly/quarterly)
Similar to household employers, self-employed, voluntary, and non-working spouse members can choose to pay their contributions monthly or quarterly. Payments should be made before the last day of the month following the applicable period.
- OFWs (monthly, quarterly, annually)
Overseas Filipino Workers (OFWs) have the flexibility to make SSS contributions monthly, quarterly, or annually. They can make payments at any time during the year according to their preference.
It's crucial to note that missing or late payments may incur penalties or interest charges. Therefore, ensuring timely payment of SSS contributions is essential to maintain good standing.
If you are unsure of how to pay your SSS contributions, check out the list of collecting agents for the period of January 2024 to 31 October 2024. These collecting agents ensure the efficient collection of funds from its members while complying with the necessary standards. In case you require an HR compliance checklist to ease out the whole process, here’s everything you need to know.
What are the benefits of SSS?
The Social Security System (SSS) offers a lot of benefits to its members and provides financial assistance in their time of need. Here are some of its major benefits:
Sickness
The SSS provides sickness benefits to support members who cannot work due to illness or injury. This benefit entails a daily cash allowance equivalent to 90% of the member's Average Daily Salary Credit (ADSC). It is applicable for a maximum duration of 120 days within a calendar year.
To qualify for sickness benefits, here are the criteria one needs to meet:
- The member must have been confined to the hospital or home for at least four days due to illness or injury.
- Members can only claim sickness benefits if they have exhausted their company sick leave with pay for the calendar year.
- Regardless of employment status (whether regular employees, self-employed, or overseas workers), members must claim sickness benefits from the SSS directly.
Maternity
Maternity benefits provide crucial support to expecting mothers during their childbirth journey. By submitting a maternity leave application, mothers-to-be can access paid benefits, determined by the type of delivery - whether natural birth or by cesarean.
These benefits amount to 100% of the member's average daily salary credit, with variations based on circumstances: 105 days for normal delivery, 105 days for cesarean, 120 days for solo parents, or 60 days for cases of miscarriage, stillbirth, or terminated pregnancy.
Upon applying, beneficiaries typically receive benefits within 30 days. Moreover, an option exists for transferring up to seven days of these benefits to the father, regardless of marital status.
To qualify for these benefits, members must have contributed to the SSS for at least three months within the 12 months preceding the semester of childbirth or miscarriage. These provisions ensure that expecting mothers receive the necessary financial assistance to cover medical expenses, childcare costs, and other necessities during their maternity leave.
Disability
The disability benefits paid in either lump sums or monthly payments cater to the needs of disabled members of the SSS, whether partially or fully. Qualified members receive a monthly disability pension and a ₱500 supplemental allowance every month.
Again, the amount credited depends on the years of service.
- Less than ten years: ₱1,000
- Ten years of service: ₱1,200
- 20 years of service: ₱2,400 with an additional ₱1,000 benefit
The individuals are eligible to receive disability benefits if they have made at least one month of contributions before the disability semester. To receive monthly contributions, they must have completed at least 36 contributions. If not, they are only eligible for the lump sum amount.
Unemployment
Terminated members benefit greatly from the unemployment benefit of making SSS contributions. The total credited amount can be used by the member to look for another job. Generally, the amount received is 50% of the member’s monthly salary. However, the maximum limit is set at ₱10,000 even if the member has a salary or wage over ₱20,000 and exceeds the contribution limit. It’s crucial to note that resignations are not covered under this benefit. The members must be terminated to avail of the benefit.
Retirement
Retirement benefits are crucial to ensure you live a healthy and fulfilling life during old age. The SSS provides retirement money in a lump sum or monthly payments as deemed fit. Moreover, as a bonus, SSS grants an additional 13th-month pension to its members every December.
The amount received depends on the years of service: for 10 credited years, members receive ₱1,200, and for 20 years, they are entitled to ₱2,400 along with an additional ₱2,000 in benefits.
To qualify for these benefits, members must meet specific criteria:
- For voluntary retirement, members must be at least 60 years old and have paid at least 120 contributions before the retirement semester.
- For mandatory retirement, members need to be at least 65 years old and have made 120 contributions before the retirement semester.
For members seeking a lump sum payment, a minimum of 120 contributions is required. If this criterion isn't met, members can continue making contributions until they reach the threshold necessary to avail further benefits.
Moreover, there are special provisions for specific categories of workers:
- Surface and underground mine workers are eligible for voluntary retirement at 50 and mandatory retirement at 60, provided they have at least five years of service.
- Racehorse jockeys can opt for retirement at 55, with a minimum of 120 months of contributions and five years of experience.
Death
The SSS makes it a point to cater to the needs of the family members of the deceased person. It gives cash grants, either monthly or a lump sum amount, to the deceased member's beneficiaries. This is in addition to the 13th-month pension they receive every December.
The monthly amount depends on the years of service. However, the minimum amount stands at ₱1,000 for members with less than 10 years of service with additional benefits of ₱1,000.
The benefits are given to the primary beneficiaries, including the spouse and children. In the absence of primary beneficiaries, second beneficiaries, such as dependent parents, get the benefits. Family members are only entitled to receive the death benefit if the member has made 36 contributions before the semester of the death.
In the case of minor beneficiaries, an equivalent of 10% of the member’s contribution will be given or ₱250, whichever is higher.
Funeral
The funeral benefit is the total amount of cash given to the member who conducts the funeral services of the deceased. The amount received can be anywhere between ₱20,000 to ₱40,000, depending on the number of SSS contributions, years of service, and average monthly salary credit.
In case the member was employed, the employer should report the coverage. On the flip side, self-employed, non-working spouses, and voluntary members should make at least one month of contribution to become eligible.
Simplify SSS Contribution Compliance with Omni
Understanding and managing SSS contributions is important not only for the employers but also employees in the Philippines. Employers must comply with laws and ensure that employees are receiving the benefits they deserve, while employees on the other hand, rely on these contributions for social security and financial stability. That’s why it’s important to have automated HR tools on your side.
Omni’s all-in-one HR solution helps streamline payroll processes and free of manual error to reduce the administrative burden on HR. With secure and centralized employee records, HR teams can easily store, update, and communicate employee information across departments and with employees.
Omni offers a comprehensive payroll solution tailored to Philippines specific requirements. With features like support for Philippine peso, automated tax calculations, and managed SSS, PhilHealth and PAG-IBIG contributions, Omni can help HR teams simplify their SSS contributions and ensure compliance with ease.
If you’re ready to take SSS contribution management to the next level,
If you’d like to learn more about how Omni’s all-in-one HR software automates the entire end-to-end employee lifecycle, book a demo with our team.
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