Veto message mandating a two thousand peso across the board increase in the monthly pension with cor

#(fice of tl)e S^vz^ihent of tje jpijilippinesi iJlalacaitang 12 J a n u a r y

2016

HON. FELICIANO R. BELMONTE, J R .

Speaker House of Representatives, Batasan Hills, Quezon City Dear Speaker Belmonte: We respectfully transmit herewith the Veto Message of His Excellency, President Benigno S. Aquino III, on enrolled House Bill No. 5842 entitled: "AN A C T MANDATING A TWO THOUSAND P E S O {P2,000) A C R O S S - T H E - B O A R D INCREASE IN T H E MONTHLY PENSION WITH CORRESPONDING ADJUSTMENT O F T H E MINIMUM MONTHLY PENSION UNDER THE SOCIAL S E C U R I T Y S Y S T E M , AMENDING F O R T H E P U R P O S E SECTION 12 O F R E P U B L I C A C T NO. 1661, A S AMENDED, OTHERWISE KNOWN A S T H E S O C I A L S E C U R I T Y ACT OF 1997," pursuant to the provisions of Article VI, Section 27 (1) of the 1987 Constitution.

Best regards.

Very truly yours.

PAQUITO N/OCHOA, J R .

E x e c u t i ^ Secretary

Copy Furnished: Hon. Franklin M. Drilon Senate President Senate of tine Philippines Pasay City Undersecretary Bernardino E. Sayo Presidential Legislative Liaison Office (House of Representatives)

MALACANAN PALACE

12

January

2016

THE HONORABLE SPEAKER and Members of the House of Representatives Quezon City Ladies and Gentlemen: Pursuant to Section 27 (1), Article VI of the Constitution, I am returning herewith the enrolled bill H.B. 5842, entitled: "AN ACT MANDATING A TWO THOUSAND PESO (P2,000) ACROSSTHE-BOARD INCREASE IN THE MONTHLY PENSION WITH CORRESPONDING ADJUSTMENT OF THE MINIMUM MONTHLY PENSION UNDER THE SOCIAL SECURITY SYSTEM, AMENDING FOR THE PURPOSE SECTION 12 OF REPUBLIC ACT NO. 1661, AS AMENDED, OTHERWISE KNOWN AS THE "SOCIAL SECURITY ACT OF 1997," without my signature.

While we recognize the objective of the bill to promote the well-being of the country's private sector retirees, we cannot support the bill in its present form because of its dire financial consequences.

A Two Thousand Peso (P2,000) across-the-board pension increase with a corresponding adjustment of the minimum monthly pension will result in substantial negative income for the Social Security System. More specifically, the proposed pension increase of F2,000.00 per retiree, multiplied by the present number of more than two (2) million pensioners, will result in a total payout of P56.0 billion annually. Compared against annual investment income of P30 billion - P40 billion, such total payment for pensioners will yield a deficit of P16 billion - P26 billion annually.

Given this situation, the Social Security System will be constrained to draw from and use its Investment Reserve Fund (IRF) to support the pension increase. Consequently, the IRF will diminish over the years, eventually reaching zero by the year 2029. The stability of the entire benefit system, whose present membership comprises about 31 million individuals, will be seriously compromised in favor of two (2) million pensioners and their dependents.

In view of these considerations, I am constrained to veto the abovementioned enrolled bill.

THE PRESIDENT OF THE PHILIPPINES

(Sffice of tl)e JPres^itrent iHalacairans 12 J a n u a r y

2016

HON. FRANKLIN M. DRILON Senate President Senate of the Philippines GSIS Building, Financial Center Roxas Boulevard, Pasay City Dear Senate President Drilon: We respectfully transmit herewith the Veto Message of His Excellency, President Benigno S. Aquino III, on enrolled House Bill No. 5842 entitled: "AN A C T MANDATING A TWO THOUSAND P E S O (P2,000) A C R O S S - T H E - B O A R D INCREASE IN THE MONTHLY PENSION WITH CORRESPONDING ADJUSTMENT O F THE MINIMUM MONTHLY PENSION UNDER THE SOCIAL S E C U R I T Y S Y S T E M , AMENDING F O R T H E P U R P O S E SECTION 12 O F R E P U B L I C A C T NO. 1661, A S AMENDED, OTHERWISE KNOWN A S T H E S O C I A L S E C U R I T Y A C T OF 1997," pursuant to the provisions of Article VI, Section 27 (1) of the 1987 Constitution.

Best regards.

Very truly yours,

PAQUITOW. OCHOA, J R .

E x e 5 ^ v e Secretary

Copy Furnished: Hon. Feliciano R. Belmonte, Jr. Speaker House of Representatives Undersecretary Antonio Gallardo Presidential Legislative Liaison Office (Senate)

MALACANAN PALACE 12

January

2016

THE HONORABLE SENATE PRESIDENT and Members of the Senate Senate of the Philippines Pasay City Ladies and Gentlemen: Pursuant to Section 27 (1), Article VI of the Constitution, I am returning herewith the enrolled bill H.B. 5842, entitled: "AN A C T MANDATING A TWO THOUSAND P E S O (P2,000) A C R O S S - T H E - B O A R D INCREASE IN THE MONTHLY PENSION WITH CORRESPONDING ADJUSTMENT O F THE MINIMUM MONTHLY PENSION UNDER THE SOCIAL S E C U R I T Y S Y S T E M , AMENDING FOR THE P U R P O S E SECTION 12 O F R E P U B L I C A C T NO. 1661, A S AMENDED, OTHERWISE KNOWN A S T H E S O C I A L S E C U R I T Y A C T OF 1997," without my signature.

While we recognize the objective of the bill to promote the well-being of the country's private sector retirees, we cannot support the bill in its present form because of its dire financial consequences.

A Two Thousand Peso (P2,000) across-the-board pension increase with a corresponding adjustment of the minimum monthly pension will result in substantial negative income for the Social Security System. More specifically, the proposed pension increase of P2,000.00 per retiree, multiplied by the present number of more than two (2) million pensioners, will result in a total payout of P56.0 billion annually. Compared against annual investment income of P30 billion - P40 billion, such total payment for pensioners will yield a deficit of P16 billion - P26 billion annually.

Given this situation, the Social Security System will be constrained to draw from and use its Investment Reserve Fund (IRF) to support the pension increase. Consequently, the IRF will diminish over the years, eventually reaching zero by the year 2029. The stability of the entire benefit system, whose present membership comprises about 31 million individuals, will be seriously compromised in favor of two (2) million pensioners and their dependents.

In view of these considerations, I am constrained to veto the abovementioned enrolled bill.

Copy Furnished: Hon. Feliciano R. Belmonte, Jr. Speaker House of Representatives

THE PRESIDENT OF THE PHILIPPINES