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Philippine Social Security System 2007 Annual Report

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  • 1. 2007 A N N U A L R E P O R T Truly Time-tested. SOCIAL SECURITY SYSTEM
  • 2. Contents 2007 ANNUAL REPORT Highlights of Operations (Amounts in Million Pesos) Consolidated 01 Highlights of Operations 2007 For the Year 2006 Increase/(Decrease) Amount % A. REVENUES & EXPENDITURES 02 Statement of Mission and Vision Revenues 79,699.06 64,651.50 15,047.56 23.3 Contributions 61,829.08 52,543.60 9,285.48 17.7 Investment and Other Income, net 17,869.98 12,107.90 5,762.09 47.6 Messages Expenditures Benefit Payments 67,565.85 60,746.59 58,501.88 52,122.01 9,063.97 8,624.58 15.5 16.5 03 Message of the President of the Republic of the Philippines Operating Expenses 6,819.26 6,379.87 439.39 6.9 04 Message of the Chairman Net Revenue/(Loss) 12,133.21 6,149.62 5,983.59 97.3 B. ASSETS & RESERVES 06 Message of the President and CEO Assets 247,737.21 228,444.46 19,292.76 8.4 Investments 225,565.32 205,225.54 20,339.78 9.9 SSS Properties 2,586.33 2,544.54 41.79 1.6 2007 In Review Others Liabilities Reserves 19,585.56 4,720.56 243,016.66 20,674.38 3,448.59 224,995.87 (1,088.81) 1,271.97 18,020.79 (5.3) 36.9 8.0 09 Celebrating the SSS’ Golden Year 19 Nurturing Relationships with Special Sectors and the General Public Social Security System 23 Taking the Lead in International Relations 2007 For the Year 2006 Increase/(Decrease) Amount % A. REVENUES & EXPENDITURES 24 Forging Partnerships for Better Service Revenues 77,887.26 62,586.42 15,300.83 24.4 25 Expressing Corporate Social Responsibility Contributions Investment and Other Income, net 60,769.48 17,117.78 51,633.40 10,953.03 9,136.08 6,164.75 17.7 56.3 27 Developing SSS Employees’ Skills, Competence and Well-Being Expenditures Benefit Payments 66,363.24 59,665.36 57,300.66 51,051.58 9,062.58 8,613.78 15.8 16.9 29 Expanding SSS’ Reach and Service Network Operating Expenses 6,697.88 6,249.08 448.80 7.2 Net Revenue/(Loss) 11,524.02 5,285.76 6,238.25 118.0 Financial B. ASSETS & RESERVES Assets 224,928.56 205,878.60 19,049.97 9.3 30 Statement of Management’s Responsibility for the Financial Statements About the Cover Investments SSS Properties 211,167.87 2,586.33 187,759.48 2,544.54 23,408.39 41.79 12.5 1.6 31 State Auditor’s Report on the Consolidated Financial Statements The 2007 Annual Report cover highlights the Others Liabilities 11,174.36 4,831.47 15,574.58 3,562.61 (4,400.22) 1,268.86 (28.3) 35.6 50th founding anniversary of the Social Security Reserves 220,097.10 202,315.99 17,781.11 8.8 32 Consolidated Balance Sheet System. 33 Consolidated Income Statement Like pure gold that has gone through the acid Employees’ Compensation and State Insurance Fund test, the SSS has been tested by time-50 years of 34 Consolidated Statement of Changes in Reserves reliable, trustworthy and faithful service to the 2007 For the Year 2006 Increase/(Decrease) Amount % Filipino worker and his beneficiaries. 35 Consolidated Statement of Cash Flows A. REVENUES & EXPENDITURES On a backdrop of golden skies symbolizing the 36 Notes to Consolidated Financial Statements bright hopes for the future is a gold pocket watch Revenues Contributions 1,811.81 1,059.60 2,065.07 910.21 (253.27) 149.39 (12.3) 16.4 signifying the length of time that SSS had carried Investment and Other Income, net 752.21 1,154.87 (402.66) (34.9) 42 Internal Auditor’s Report out its mandate. On the face of the watch are images of President Ramon Magsaysay signing Expenditures 1,202.61 1,201.22 1.39 0.1 43 Historical Data the landmark legislation creating the SSS in Benefit Payments Operating Expenses 1,081.23 121.38 1,070.43 130.79 10.80 (9.40) 1.0 (7.2) 1954 and the happy faces of the beneficiaries of the program represented by a construction Management Net Revenue/(Loss) 609.19 863.86 (254.66) (29.5) engineer, an overseas Filipino nurse and an old- age pensioner. B. ASSETS & RESERVES 46 Social Security Commission Behind the gold watch is the 50 anniversary th Assets 22,919.60 22,679.90 239.70 1.1 logo dominated by the number 50, the stylized 48 Senior Management rendition of the three S’s juxtaposed on the SSS Investments Others 14,397.45 8,522.15 17,466.06 5,213.84 (3,068.62) 3,308.31 (17.6) 63.5 main office building indicating the durability, 52 SSC and SSS Management Directory stability and strength of the institution. Liabilities Reserves 0.04 22,919.56 0.03 22,679.88 0.01 239.68 43.6 1.1 Time-tested indeed. 1
  • 3. Statements Message of the President of the Republic of the Philippines Statement of Mission M y sincere congratulations to the Social Security System (SSS) as it successfully marks 50 years of dedicated service to working Filipinos here and abroad. As it celebrates The mission of the SSS is spelled out in Section 2 of the Social Security its golden anniversary, the SSS is firmly back on its feet, Law (Republic Act No. 1161), as amended by the Social Security Act of stronger, and more resilient than ever, and its public credibility regained, 1997 (Republic Act No. 8282): as evidenced by its consistent high ranking in surveys of institutions effectively fighting corruption. “It is the policy of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the The reforms within SSS have resulted in improved contribution collection needs of the people throughout the Philippines which shall promote and membership coverage, increased revenues, a crackdown on social justice and provide meaningful protection to members and their remittance delinquents, and better fiscal discipline. This has put the SSS beneficiaries against the hazards of disability, sickness, maternity, on a path to sustainable growth and stability, as shown by an actuarial old age, death and other contingencies resulting in loss of income or fund life span that has lengthened by more than 20 years. By ensuring financial burden. Towards this end, the State shall endeavor to extend that collections continue to exceed benefit payments, the SSS is steadily social security protection to workers and their beneficiaries.” moving towards attaining perpetuity in its fund life – a situation that will ensure that SSS can continue fulfilling its mission of viable and social security coverage. The 50th Anniversary logo design highlights the 50 years of SSS’ existence. Statement of Vision Indeed, for the past 50 years, the SSS has not just improved the lives of its individual members, but has also contributed to the expansion of The SSS aims to develop and promote a viable, universal and equitable the national economy through investments that grow business, create Circular in shape and rendered social protection scheme through world-class service. jobs, foster better healthcare, and allow more educational and housing in blue and yellow, the round logo opportunities. suggests the global reach of SSS. Viable means that it is financially sustainable, non-distortionary, and The golden yellow color refers to requires no government subsidy. Current and future generations of As the SSS prepares for the next half century and beyond, it should the golden or 50 years of SSS. workers and retirees are also assured of meaningful benefits in return continue to reflect new levels of maturity in its social security schemes, as The rich electric blue used as for their contributions. well as in its modernization and technological improvements. However, it must also continue balancing its vital functions of capital build-up and background provides an effective Universal means that protection shall be provided to all residents of the support for national social programs, along with is mandate of providing contrast to the yellow, thus focusing Philippines, citizens and non-citizens alike, regardless of race, creed, a lifeline to its members. the sight to the 50 years graphic gender, age, geographic location and socio-economic status. Attention element. The electric blue is also will be given especially the disadvantaged and overseas Filipino workers I am confident that the good men and women of SSS, led by Social the corporate color of SSS. The (OFWs). Security Commission Chairman Thelmo Y. Cunanan and President and stylized triple S elements are Ten-Point agenda to “Beat the Odds” CEO Corazon S. de la Paz–Bernardo, are up to the challenge of living up reminiscent of upward line graphs, Equitable means fair and uniform coverage shall be made available to in Six Years under the Arroyo to your anniversary theme, as the people’s kaagapay, kaibigan, kabalikat indicating the dynamism of SSS. all. Benefit entitlements shall be closely linked with contributions. Administration magpakailanman. The SSS building in the background World-class service means that the highest standards of service shall B - Balanced budget Maraming salamat at Mabuhay ang SSS! signifies the strength and stability be used to ensure total member satisfaction. A multi-skilled, forward- E - Education for all of the institution. Completing the A - Automated elections looking and generalist SSS workforce shall provide service that is logo is the anniversary theme: T - Transport and digital infrastructure to prompt, accurate and courteous. “Kaagapay, Kaibigan, Kabalikat connect the country Magpakailanman,” i.e., the SSS is a GLORIA MACAPAGAL-ARROYO helping hand, a friend, a shoulder to T - Terminate the MILF and NPA conflicts H - Heal the wounds of EDSA President lean on at all times to its members Republic of the Philippines E - Electricity and water for all Barangays and their beneficiaries. O - Opportunities for 10 million jobs D - Decongest Metro Manila DS- Develop Clark and Subic 45 2 3
  • 4. Message “ Protecting the soundness of the SSS Program is certainly a step towards ensuring that the SSS will be there for the next generation.” of the Chairman 2 007 is a year of special importance to the Social Security its actions and decisions. In addition, the SSC will continue to System (SSS) as it celebrates half a century of dedicated ensure that investment decisions are manifested in an investment commitment to effectively fulfill its mandate of providing portfolio that gives the SSS safer, better and more predictable social protection for generations of SSS members and yields. In 2007, the SSC started work on the formulation of an pensioners, epitomizing its role as a true “Kaagapay, Kaibigan, Asset Allocation Strategy, taking off from the recommendations of Kabalikat Magpakailanman”. It is with great pride and distinct the World Bank-Asia Europe Meeting funded project. pleasure that I serve as Chairman of the Social Security Commission (SSC) through 2007, SSS’ Golden Anniversary Year. The SSC also notes with satisfaction the focus and zeal of SSS under President and CEO Corazon S. de la Paz – Bernardo in strengthening Apart from being an institution that its members can turn to its governance standards in the four areas of Financial Viability, in times of financial need brought on by contingencies, SSS Sound Investments, Quality Service and Corporate Culture. also plays a critical role in the economy and its development. Its contributory role in economic development is channeled We at the SSS have taken on the challenge of restoring the financial through its investments for the development and expansion of the health and the fiscal sustainability of the Fund. Protecting the productive capacity of key sectors particularly in housing, energy, soundness of the SSS Program is certainly a step towards ensuring infrastructure, telecommunications and utilities. As a government that the SSS will be there for the next generation. We would like financial institution, it also supports the growth and development to express our sincerest thanks to Her Excellency President Gloria of the local capital market. Through its banking partners, the SSS Macapagal-Arroyo for the continued support she has extended to injects funds to the private sector through its investments in long- the SSS most particularly the approval of the much-needed one- term corporate bonds and notes, real estate properties, as well as in percentage point increases in the SSS contribution rates in 2003 more liquid instruments such as equities and stocks. and 2007. While a number of reform measures have been adopted by the SSS, none is as correct, as direct and as appropriate as a raise It is for the above reasons that the SSS is committing itself not in its contribution rate. only to restore the financial health, the fiscal sustainability and the actuarial life of the system but equally important is to provide Maligayang ika-limampung anibersaryo sa SSS. Salamat sa kalahating meaningful benefits to our members. By facing up to the challenges dekada ng paglilingkod sa mamayang Pilipino. that confronted the SSS in the recent past years, and with the help of all the SSS stakeholders as well as our national policymakers, the SSS has succeeded in making the institution a more sustainable provider of social protection in the country and a stronger partner in its development with the implementation of the various corrective measures and reforms. Foremost of its achievement is the extension in the actuarial life of the fund by more than 20 years, based on the 2007 actuarial updates, from the 2015 fund life in the 1999 actuarial valuation. Along the way, we are able to correct the imbalance between the SSS contributions and benefit payments and achieved a high surplus of P1.1 billion in 2007. THELMO Y. CUNANAN With the vision to extend the mantle of social protection to more Chairman Filipinos, SSS membership has significantly grown to more than 27 million individual members as of end-2007. This is 9.4 million more than the membership in 1996, prior to the enactment in May 1997 of a new Social Security Law or the Social Security Act of 1997 (Republic Act 8282). The role of the SSC in ensuring the SSS commitment to the primacy of its fiduciary responsibility to its members as well as fostering good governance to encourage even greater transparency, accountability and efficiency is rather critical. Through the various committees formed within the SSC, namely, the IT Sub-Committee, the Budget Committee and the Audit Committee, the SSC has focused its various programs on the need to increase management’s accountability for 45 4 5
  • 5. “ The 50th year milestone gave us the opportunity to look back to our past Message and learn from the wisdom of our founding fathers and be inspired to move forward to another 50 years: wiser, stronger and more focused.” of the President and CEO T he year 2007 marked a very significant milestone in the SSS also continued to embark on its drive to minimize fraudulent resumed the educational and scholarship grants both locally and history of the Social Security System as it celebrated its benefit claims with the enhancement of the Annual Confirmation of abroad. We continued to embark on a number of activities that 50th founding anniversary. For half a century, the SSS has Pensioners, a program which started in 2004. The enhancements would contribute to the health and well-being of SSS employees consistently and unwaveringly risen up to the challenge of aim to provide greater convenience to our pensioners as well and consequently, ensure a balanced work-life such as sports fulfilling its mandate of providing meaningful protection to private as immediate restoration of pensions upon compliance to the activities, quarterly after-office unwinding activities, fitness sector workers and their families against the real life contingencies program. workshops, among others. of old age, disability, death, sickness, maternity and employment injury. Presiding over the administration of the SSS during this Higher returns on investment. The investment portfolio of SSS is Keeping true to its commitment of institutionalizing a corporate auspicious time in the SSS’ history is an honor indeed. now giving it safer, better and more predictable yields. Year 2007 culture that instills professionalism and integrity, a Code of Ethics chronicled another momentous year in terms of investments. SSS has been finalized to guide in the execution and discharge of Aside from 2007 being its golden year and therefore a time of benefited much from the bullish performance of the stock market, official duties of all SSS officials, employees and service bureau jubilation, the SSS’ solid performance during the year gives much earning dividend income of P2.6 billion from its equity holdings. contractuals. In a related matter, in a recent survey of the Social cause for celebration. The SSS likewise earned P9.9 billion mainly from the sale of shares Weather Station, the SSS ranked first among government financial of San Miguel Corporation (P7.1 billion) and PLDT (P2.3 billion). institutions and placed second among 29 government offices in the Growth in contributions. For the third year in a row, SSS These transactions bring total income from equities to P11.6 billion, executive branch in terms of sincerity in battling corruption. This is contributions collection exceeded benefit payments posting a huge almost five times as much as the previous year’s income. Given the second time SSS obtained a high sincerity rating in the survey. surplus of P1.1 billion, almost three times as much as the P422 the extraordinary transactions from equities, total income from million surplus recorded in 2006. The contribution-benefit surplus investments and other income reached a high of P17.9 billion, a Efforts are underway for the building construction of eight (8) SSS was achieved as contributions collection grew at a faster pace of sharp rise of 47.6 percent from the investment income earned in branch offices, particularly the much-delayed Cebu Branch, in 17.7 percent vis-à-vis the 16.6 percent growth in benefit payments. 2006. Furthermore, the SSS also benefited from the sale of Banco order to service our expanding membership and to accommodate It may be recalled that not so long ago, the SSS continuously De Oro stocks with realized gain of P9.1 billion and which would our tellering facilities. Lot acquisition and renovation of SSS stayed in the red from 1999 to 2004, reaching its historic high be reflected in the 2008 financial accounts. buildings are likewise on-going. contribution-benefit deficit of P7.6 billion in 2001. Henceforth, the SSS deliberately adopted measures to narrow the contribution Greater collection efforts have been pursued, including the Celebrating fifty years. To mark this milestone year, we pulled all deficit and successfully achieved a dramatic turnaround in the extension of the condonation program for salary loans as well as for stops to celebrate meaningfully SSS’ founding anniversary together financial status beginning in 2005. housing loans to encourage members to pay their delinquencies. with our members, partners, and former employees. In recognition The extension of the salary loan condonation program for the period of the important role that former President Ramon Magsaysay The growth of contributions collection from P52.5 billion in 2006 January to June 2007 yielded an additional collection totaling played in the formation of SSS, a set of commemorative stamps to P62 billion in 2007 was partly made possible as SSS managed to P110 million from 28,180 accounts. Whereas, the condonation in his honor was launched together with the Philippine Postal get the approval of President Gloria Macapagal-Arroyo for another program for housing loans which was extended until March 2008 Service. A refurbished Ramon Magsaysay Hall, the SSS auditorium one-percentage point increase in the SSS contribution rate to 10.4 generated an additional P269 million in collection and benefited at the second floor of its main office, was likewise inaugurated with percent effective January 2007. More importantly, contributions 6,467 accounts. the members of the Magsaysay family gracing the occasion. collection was further improved with the continued enhancement of existing programs as well as the introduction of new ones such as Prudent operating expenses and longer fund life. Equally Likewise, Her Excellency President Gloria Macapagal-Arroyo (a) expansion of the teller counter facilities from 51 to 77 branches significant, we have managed to keep the growth of operating honored us with her presence during the 50th Anniversary program (including the Main Office) and automation of 19 of these facilities, expenses at prudent levels. For 2007 SSS operating expenses stood held on Sept. 3. In her keynote message, President Arroyo thanked (b) expansion of existing payment facilities, (c) implementation at P6.82 million, higher by 6.9 percent compared to the 2006 level the SSS for half a century of service to the Filipino people and of new payment channels for individual members, including the but well within the Charter limit. commended the institution for embarking on a radical reform Overseas Filipino Workers (OFWs), and (d) intensified collection program that reversed the financial collapse it faced six and a efforts by accounts officers and cluster legal units. The period of cumulation of revenues vis-a-vis expenditures over half years ago. In the words of President Arroyo “Now, SSS is the period of SSS existence is reflected in the steady growth of fund back on its feet, stronger and more resilient than ever, and with Growth in Benefits. The growth in benefit payments from P52.1 assets. In a span of five decades, total assets soared from P6.4 your credibility regained, ranking third in the survey of institutions billion in 2006 to P60.8 billion in 2007 may be attributed largely million in 1957 to P248 billion as of end-2007. effectively fighting corruption.” to the 10 percent across-the-board pension increase effective August 1, 2007. This was the second time that the SSS announced a It is worthwhile to note that the sum total of the efforts of the SSS In order to celebrate with our members this milestone year, we pension increase in less than a year. The earlier pension increase in translated to a further improvement in the actuarial life of the fund. conducted a special day for our pensioners nationwide providing September 2006 was the first pension increase since 2001. These Now, the most recent computation of SSS actuaries is showing an them with medical and other services. We also honored our pension increases were granted in response to the long-standing additional 6 years in the life of the fund, extending it from 2030 partners in giving meaningful social security protection to our clamor of its more than one million pensioners and were made based on the 2003 actuarial valuation to 2036 based on the 2007 covered members through the “Balikat ng Bayan” Awards during possible after having restored financial vigor and strength into the actuarial updates. an awarding ceremony in October 2007. Likewise, a Family SSS. In view of the recent pension increases, retirement and death Day for SSS Employees was celebrated for the first time. We also benefits soared by 19.5 percent and 18.7 percent, respectively, Professional and ethical workforce. To further enhance the skills invited the men and women who helped build SSS to what it is from the 2006 levels. These two benefits accounted for more than and competence of our growing workforce, we continued to today to a special reception in their honor as a way of expressing 80 percent of total benefit payouts to members. conduct training and professional development programs and has the institution’s gratitude for their contributions and sacrifices. In 45 6 7
  • 6. that occasion Defense Secretary Gilbert Teodoro, the son of former SSS Administrator Gilberto Teodoro who served for 20 years, was invited guest of honor. Truly, the 50th year milestone gave us the opportunity to look back to our past and learn from the wisdom of our founding fathers and be inspired to move forward to another fifty years: wiser, stronger and more focused. External Orientation. The SSS values its membership in organizations such as the International Social Security Organization (ISSA), the ASEAN Social Security Association (ASSA) and, at the local level, the Philippine Social Security Association (PhilSSA). Celebrating the SSS’ Golden Year These organizations foster cooperation in the promotion and development of social security throughout the world, primarily through its technical and administrative improvements. Opportunities to improve ourselves abound by learning from the experiences of other countries as well as other organizations within the country. My re-election to the ISSA Presidency in September 2007 has provided another opportunity for the country and the SSS to be The year 2007 was a banner year for SSS in every respect. Not only did SSS post a record high financial performance during this right at the center of developments as the Philippine agenda for time, it was also the year it marked its 50th founding anniversary. social security reform continue to conform with the ISSA agenda. For institutions, 50 is quite young; nonetheless, it is deserving of a special celebration. Hence, SSS pulled all stops to mark this Conclusion. It is gratifying to note that on its 50th year, the SSS milestone year to remember how the institution began and to trace its development and evolution to what it is today: a noble, posted significant growths in all areas of its operations. For these, dynamic and reliable partner of the workers and their families. we thank our members, their beneficiaries, our pensioners, our partner banks and other business partners, the SSS personnel, the Social Security Commission and her Excellency President Gloria Macapagal-Arroyo for their unending support, trust and To officially signal the start of the celebration, a 50- Shown unveiling the countdown marker is President and confidence. The SSS has always believed that every challenge day count down to September 1st, the official founding CEO Corazon S. de la Paz-Bernardo with Vice President defines an opportunity; the greater the challenge, the greater the anniversary of SSS, was held on July 13, followed by Alfredo S. Villasanta, Chief Actuary and Executive Vice opportunity. Now more than ever, SSS needs the support of all its a consultative meeting with former SSS employees President Horacio T. Templo, and Engr. Nestor R. Sacayan. members and stakeholders as it grasps this opportunity to continue restoring the SSS farther into the future. and officials who were made part of the celebration. 50-DAY COUNTDOWN TO 50 YEARS ELECTION OF ISSA OFFICERS AT THE 33RD SESSION OF THE COUNCIL CORAZON S. DE LA PAZ–BERNARDO At the 33 Session of the Council, SSS President rd President and CEO and CEO Corazon S. de la Paz-Bernardo of the Philippines was re-elected by acclamation as President of the International Social Security Association (ISSA) for another three year-term with Hans-Horst Konkolewsky, Secretary General (left) and Wim Franssen, Treasurer (right). 45 8 9
  • 7. INAUGURATION AND BLESSING OF REFURBISHED CONSULTATION MEETING WITH FORMER SSS OFFICIALS RAMON MAGSAYSAY HALL MUSEUM EXHIBIT Pioneering officials and employees recounted the history This was followed by the re-opening of the newly of the institution and their roles in it during a consultative refurbished Ramon Magsaysay Hall, named after the meeting at the Executive Lounge. beloved Philippine President under whose administration the SSS came into being. Senator Ramon Magsaysay Jr., and sister Mila Magsaysay-Valenzuela graced the ceremonies, which also opened the new SSS Museum. Afterwards, the postal stamps commemorating the SSS’ 50th Anniversary were unveiled. THE EMPLOYEES’ CENTER GARDEN, inaugurated by President and CEO Corazon S. de la Paz-Bernardo, proved to be August 31, 2007 proved to be a busy day, which a relaxing oasis for harried SSS employees and members started with the opening of exhibits led by Chairman Aside from the SSS commemorative stamps, also unveiled alike, as well as venue for employee programs at the Thelmo Y. Cunanan and President and CEO were the postage stamps marking the birth centenary of Main Office. Corazon S. de la Paz-Bernardo. President Ramon Magsaysay. 50TH ANNIVERSARY ACTIVITIES COMMENCE COMMEMORATIVE STAMPS UNVEILING 45 10 11
  • 8. EMPLOYEE AWARDS The Employee Awards Program honored the 2007 Best Account Officers, the best processing branches via the 2007 Covenant of Service Awards, and the outstanding Member Service Officers via the Eriberto W. Valencia Service Excellence Award which was launched for the first time in honor of the late Deputy Administrator Eriberto W. Valencia who was known for his dedication and service to the SSS and its members. It was rather unfortunate that the nominee of the Southern Mindanao Cluster to the EWV Service Excellence Award Search, Macario L. Calunsag, Jr. Officer-in-charge of Cotabato Branch, was shot dead on August 29, 2007, two days prior to the awarding on September 1. There were strong indications that the motive was work-related since Mr. Calunsag had no known enemies except for occasional discussions with persons who were assisting the claimants. “Macmac”, as known to his friends and To enable employees to relax and celebrate SSS’ 50th relatives, led his people to believe that providing the year, a concert of various bands was held on August 30 best service is the best weapon an employee can have at the new garden area. in public service. EMPLOYEES’ NIGHT MACARIO L. CALUNSAG, JR. 45 12 13
  • 9. GRAND HOMECOMING OF SSS OFFICIALS AND EMPLOYEES Former Social Security Commission (SSC) Chairman It was a night of nostalgia, recognition, and merrymaking Adrian E. Cristobal was represented by his son, DTI as the former officials and employees of SSS gathered at Assistant Secretary Adrian S. Cristobal, Jr. (2nd top left the Members Assistance Center at the Main Office for photo) while the oldest surviving SSS employee, Mrs. a grand homecoming. Department of Defense Secretary Evangelina H. Lacson (center, top left photo) also Gilbert Teodoro, Jr. (top center photo) --- the son of graced the affair. Former Salary Loans Department Head SSS’ longest-serving administrator, Gilberto Teodoro --- Salome Ontong (bottom left photo) presented a dance was the guest of honor and aptly represented his father. number while former Senior Deputy Administrator Other past administrators, such as Jose Cuisia, Jr. (top left and International Social Security Association Regional photo) were also given tribute. Celebrities Julius Babao Director, Atty. Hector B. Inductivo (top right photo) and Cristine Bersola-Babao hosted the event. Other past sang for his colleagues. The SSS Chorale Society (bottom officials shared their talents with a dance number from lower left photo), entertained the guests while retirees former Senior Deputy Administrator Mauricio Rivera and from the Public Affairs pose with VP Marissu G. Bugante wife Leticia (bottom left photo) while former Medical (2nd from right, center bottom photo) and former NCR Director Leticia Palma (center seated, bottom right photo) North Cluster AVP Melocena I. Deniña. shared memories with colleagues. Commissioner Jose Sonny G. Matula (bottom right photo) pose with SSS officials and retirees. 45 14 15
  • 10. 26 PRESIDENT ARROYO GRACES THE SSS 50TH ANNIVERSARY CELEBRATION On September 3, 2007, the country’s chief executive, President Gloria Macapagal-Arroyo (PGMA), was the guest of honor during the anniversary program held at the Ramon Magsaysay Hall. PGMA extolled the remarkable growth of SSS and its various programs that benefited not As part of its Golden Anniversary celebration, the just SSS members, but the country as a whole. During annual SSS Balikat ng Bayan (BnB) Awards had an the program, PGMA was given a framed copy of SSS’ expanded category for individuals and institutions that commemorative stamps, after which she posed for photos were invaluable partners of SSS for the past 50 years. with SSS officials and the Social Security Commission. The awarding ceremonies were held on October 26, 2007 at the Ramon Magsaysay Hall, with the Honorable Vice President of the Philippines Noli De Castro as Keynote Speaker. SSS President and CEO Corazon S. de la Paz-Bernardo and Social Security Commission Chairman Thelmo Y. Cunanan gave out BnB Awards to eleven individuals and twelve companies and agencies in recognition of their assistance to and partnership with the SSS in providing social security protection to Filipinos. Top employers and best performing banks were also honored. Also honored posthumously were former Presidents of the Republic and legislators responsible for the passage of the SSS Law. BALIKAT NG BAYAN AWARDS 45 16 17
  • 11. CLASSICS AT CHRISTMAS CONCERT CENTRAL VISAYAS TRADE FAIR, CEBU CITY SANDUGO FESTIVAL, TAGBILARAN CITY To close out 2007, the SSS sponsored a musical concert at the Ramon Magsaysay Hall, featuring world-class relationships musicians Maestro Raul Sunico (piano), Antonio Maigue (flute), and Alfonso Bolipata (violin) playing musical Nurturing pieces from the 1950s – the decade of SSS’ birth. A commemorative CD, titled “Kabalikat” and featuring these musical pieces was likewise launched. (Below from left to right photos) Concert pianist Raul with special sectors and the general public Sunico (4th from right) pose with the officers of SSS The SSS thrives on the support and cooperation of its members, as well as of the general public. For this reason, the SSS nurtures its branches in the NCR; President and CEO Corazon S. de relationship with special sectors of its membership, and reaches out to various private sector groups and the greater public. la Paz-Bernardo and Mr. Enrique Bernardo together with NCR branch managers and former NCR Vice President Aurora E. L. Ortega pose for posterity by the concert poster; Flutist Antonio Maigue signs autographs on the SSS On September 5, pensioners were the stars of the show Commemorative CD. at the Pensioners’ Day Program held at the SM Mall of Asia in Pasay City. Over 1,000 pensioners’ from all over (Lower set, from left to right photos) AVP Consolacion Part of the annual anniversary celebration is the giving Metro Manila enjoyed a day of games, dancing, singing, M. Cancio (2nd from left) pose for a souvenir photo of free medical services to members and beneficiaries medical check-ups, and free giveaways. Social Welfare with NCR managers; AVP Josie G. Magana (rightmost) in SSS offices nationwide. This year, on September 4, Secretary Esperanza Cabral, who was the guest of honor, with branch managers; Quezon City Mayor Feliciano SSS medical workers nationwide gave free dental and marveled at the pensioners’ renewed vitality, thanks to Belmonte chat with other concert guests medical services. the SSS Pensioners’ Day Program. SUNICO CONCERT SCENES FREE MEDICAL SERVICES PENSIONERS’ DAY PROGRAM AT SM MALL OF ASIA 45 18 19
  • 12. ABANTE BISAYA! UNA LECHON FESTIVAL, BATANGAS SA BALITA, CEBU FLORAL FLOAT PARADE, UNIVERSITY AND COLLEGE JOB FAIRS “SERBISYO MUNA” CARAVAN AT VALENZUELA CITY ABANTE BISAYA! UNA SA BALITA, CEBU PAHIYAS FESTIVAL, LUCBAN QUEZON ZAMBOANGA CITY UNIVERSITY AND COLLEGE JOB FAIRS are among the “SERBISYO MUNA” CARAVAN is among the During this Golden Anniversary year, the SSS made regular activities of SSS through which it is able to help commitments of SSS to the Office of the President in its presence felt and its support more pronounced in new entrants to the workforce get a good start in their providing basic government services to the greater public. the special festivals and fiesta celebrations of various social security. The SSS participated in numerous “Serbisyo Muna” provinces. caravans held around the country and through these, was able to help more Filipinos attain social security coverage and services. EMPLOYERS’ DAY aims to serve the needs of member- INFO-COVERAGE DRIVES held throughout the year and PANAGBENGA FESTIVAL, the annual flower festival in PENSIONERS’ DAY is celebrated in the various SSS employers, such as those from Makati and Manila, as well in various cities and municipalities help spread the word Baguio City, got all-out support from SSS, which fielded branches, such as in Camiguin, and every program is well as introduce them to their assigned Account Officers who on the duties and benefits of SSS membership. its own flower-festooned float. attended. will assist them in their SSS-related concerns. PASAY CITY INFO-COVERAGE DRIVE PANAGBENGA FESTIVAL, BAGUIO CITY PENSIONERS’ DAY AT CAMIGUIN SSS EMPLOYERS’ DAY AT MAKATI CITY AND MANILA 45 20 21
  • 13. EMPLOYERS CONFEDERATION OF THE PHILIPPINES CHAIRMAN CUNANAN MEETS WITH ISRAELI SOCIAL SECURITY OFFICIALS EMPLOYER GROUPS, such as ECOP, are important stakeholders of SSS and their support for the long-term viability of the pension fund is most valued. Taking the in international relations Lead Year after year, officials from pension funds of other developing countries visit the SSS to learn about its programs and systems. The SSS is happy to share its expertise and experience, and thereby forge stronger ties with fraternal organizations abroad. VISITORS FROM OTHER COUNTRIES are always welcome at SSS, especially pension fund officials, such OFW DAY AND JOBS FAIR, held on June 8 at the SSS EXTERNAL SPEAKING ENGAGEMENTS by SSS President as from Tanzania and Ghana, who wish to learn from Livelihood Center, aimed to help first-time OFWs in and CEO Corazon S. de la Paz-Bernardo before various the experience and processes of SSS. The SSS also preparing for their work abroad, and returning OFWs groups, such as this Forum for Women Achievers, help welcomes the forging of agreements with OFW-host and their families in helping them establish alternative focus attention on social security and the work that SSS countries, such as Israel, for the mutual social security livelihood opportunities. does for its members and the nation. protection of their migrant workers. SSS OFW DAY AND JOBS FAIR FORUM FOR WOMEN ACHIEVERS TANZANIAN GUESTS VISITORS FROM GHANA 45 22 23
  • 14. SSS - I-REMIT MOA FOR OFW PAYMENTS HUMANITARIAN MISSION AT PAYATAS SSS - I-REMIT SERVICE AGREEMENT, signed on November 7, aims to ease and expedite the remittance of SSS contributions and loan payments by OFWs. Such collection agreements with third-party agents Expressing Corporate give members greater convenience and SSS better operational efficiency. Forging for better service partnerships Social Responsibility In order to improve service delivery and ensure wider coverage of its fast-growing membership, the SSS partners with third-party Giving back to society is important to SSS, its management and employees. As the fund celebrates its 50th anniversary, there are even service providers to help in its collection efforts. At the same time, it forges bilateral agreements with OFW-host countries for mutual more reasons to share the blessings of its Golden Year. social security protection of migrant worker SSS - GREECE SOCIAL SECURITY ACCORD is just one of bilateral agreements that the SSS worked on in 2007, with the view of expanding the reach of social security coverage to Greece-based OFWs. SSS, GREECE SIGN SOCIAL SECURITY ACCORD 45 24 25
  • 15. PGMA GUESTS AT SSS ACCOUNT OFFICERS’ NATIONAL OUTREACH MISSION AT PAYATAS BY SSS VOLUNTEER CORPS AND AFP RESERVISTS SSS LAWYERS’ FORUM CONVENTION SSS VOLUNTEER CORPS, newly established in 2007 SSS ACCOUNT OFFICERS’ CONVENTION, held on SSS LAWYERS’ FORUM, a continuing legal education and composed of SSS employees, conducted its first April 18-20, the event gathered the over 300 AOs of SSS forum wherein SSS lawyers from all over the country get humanitarian mission, in partnership with the Public to chart directions and strategies for better coverage and updated on social security-related jurisprudence and set Affairs Service of the AFP Reserve Command on collection. strategies to ensure wider compliance to the SSS Law. September 22 at Brgy. Payatas, Quezon City. Developing SSS employees’ skills, competence and well-being As the SSS develops further as a pension institution, it likewise grows as an organization of professional, competent and dedicated people. To further improve the skills and competence of its employees, the SSS conducts various training seminars and professional forums, as well as sends exceptional employees to attend international trainings and graduate studies. SSS EMPLOYEES’ DAY was held on September 8 at Island Cove, Cavite, was a day for relaxation and fun competition for hard-working SSS employees. CHRISTMAS CAROL 2007, a continuing gift-giving Employees at the head office took a break from the tradition at SSS, combines music, dances and Yuletide hectic anniversary activities by spending one Saturday, cheer as monetary donations from the SSS workforce are September 8, 2007, in sports activities at the Island Executives listen intently to the lecture on completed given out to deserving charitable institutions. Cove in Cavite. staff work. “CHRISTMAS CAROL 2007” SHARES THE BLESSINGS OF A GOLDEN YEAR TO 20 CHARITABLE INSTITUTIONS SPORTSFEST AT THE ISLAND COVE COMPLETED STAFF WORK TRAINING EMPLOYEE’S DAY AT ISLAND COVE 45 26 27
  • 16. MARIKINA CITY BRANCH INAUGURATED FAMILY DAY On September 22, 2007, the Members’ Assistance Center at the head office was transformed into a huge entertainment center for SSS employees and their families, where there was something for everyone, young Expanding SSS’ and old. reach and service network In 2007 the SSS continued expanding its branch network throughout the country by opening several new branches and refurbishing existing offices. MEMBER SERVICE OFFICERS (MSOs), here gathered in NEW BRANCH INAUGURATIONS were held in 2007, PLANNING SESSIONS, such as this conducted by the the first-ever MSO Convention, are the frontlines of SSS such as that in Marikina City and in Pasay City, as part Corporate Policy and Planning Office, is crucial in setting to the public it serves, thus, training in customer service of the SSS thrust to make its services more accessible to achievable goals and realistic targets. techniques are crucial. members, especially in Metro Manila. 5-YEAR PLANNING IN TAGAYTAY MEMBER SERVICE OFFICER (MSO) CONVENTION PASAY CITY-ROXAS BOULEVARD BRANCH OPENING 45 28 29
  • 17. Statement of Management’s State Auditor’s Report on the Responsibility for the Financial Statements Consolidated Financial Statements The Social Security Commission Social Security System East Avenue, Quezon City We have audited the financial statements of the Social Security System, which comprise the balance sheet as of December 31, 2007, and the income statement, statement of changes in reserves and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting T Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of he Management of the Social Security System is responsible for all information and representations financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; contained in the consolidated financial statements as of December 31, 2007 and 2006. The financial and making accounting estimates that are reasonable in the circumstances. statements have been prepared in conformity with the accounting principles generally accepted in Auditor’s Responsibility the Philippines, and reflect amounts that are based on the best estimates and informed judgement of Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Philippine Management with an appropriate consideration to materiality. Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. In this regard, management maintains a system of accounting and reporting which provides for the necessary An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation unauthorized use or disposition, and liabilities are recognized. of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and The Social Security Commission reviews the consolidated financial statements before such statements are the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. approved and submitted to the President of the Philippines and to the Congress of the Philippines. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion As discussed in the Note 23 to the Financial Statements, the SSS submitted on 28 September 2006 an Application to Tender Shares in respect of its entire holdings of the Common Capital Stock of Equitable PCI, Bank, Inc. (EPCIB) pursuant to the Tender Offer of SM Investments Corporation (SMIC) in concert with its affiliates, to acquire all of the outstanding common shares of EPCIB. The offer period was from 29 August 2006 to 29 September 2006. On 29 September 2006, SSS and SMIC entered into a conditional purchase and sale agreement on the subject shares of stocks under the terms and condition of the Tender Offer, provided, that on or before 02 October 2008, proceedings over the said shares pending before the Supreme Court shall be resolved with finality. Due to this pending case, both parties agreed to deposit in escrow with a trustee bank the installment dues. On 13 September 2007, the Supreme Court dismissed the said case and the decision became final and executory on 28 November 2007. Also as THELMO Y. CUNANAN CORAZON S. DE LA PAZ-BERNARDO ERLINDA O. DEL ROSARIO disclosed in Note 2.4d, SSS uses trade-date in recording regular purchase and sale of investments. Chairman, SS Commission President and CEO Vice President, Controllership Accordingly, in compliance with Philippine Accounting Standards (PAS) 39 – Financial Instruments: Recognition and Measurement, SSS should recognize the subject sale in 2007, when the agreement was freed of any impediment. 28 November 2007 is the trade-date or the date SSS commitment to sell the EPCIB shares was freed of any impediment. The non-recognition of the subject sale in 2007 overstated the financial assets-available-for-sale (AFS) by P17.28B, understated the receivable account by the same amount, and understated the income realized on AFS by P9.11B. In our opinion, except for the effect on the financial statements of the matter referred to in the preceding paragraph, the financial statements present fairly, in all material respects, the financial position of the Social Security System as of December 31, 2007, and of its financial performance and its cash flows for the year then ended in accordance with Philippine Financial Reporting Standards. COMMISSION ON AUDIT JOSE R. ROCHA, JR. Director IV Cluster II-Financial B Corporate Government Sector April 30, 2008 45 30 31
  • 18. Consolidated Balance Sheet Consolidated Income Statement (All amounts in Philippine peso) (All amounts in Philippine peso) At 31 December Increase/(Decrease) Year ended 31 December Increase/(Decrease) Notes 2007 2006 Notes 2007 2006 ASSETS Revenues Current assets Members’ contribution 61,829,080,748 52,543,604,359 9,285,476,389 Cash and cash equivalents 3 8,882,641,158 5,851,275,358 3,031,365,800 Investment and other income 20 17,869,983,502 12,107,895,279 5,762,088,223 Short-term money placements 4 14,963,848,841 3,054,471,880 11,909,376,961 Treasury bills 4 15,869,031,387 12,309,440,805 3,559,590,582 79,699,064,250 64,651,499,638 15,047,564,612 Financial assets held for trading 5 900,174,921 837,315,498 62,859,423 Receivables 6 4,190,474,693 4,765,063,848 (574,589,155) Expenditures Other current assets 7 68,674,851 121,274,024 (52,599,173) Benefit payments 44,874,845,851 26,938,841,413 17,936,004,438 Retirement 28,905,125,123 24,192,032,543 4,713,092,580 Death 21,974,158,348 18,509,963,531 3,464,194,817 Non-current assets Disability 3,231,069,857 2,989,065,117 242,004,740 Financial assets 8 183,841,372,125 179,975,392,803 3,865,979,322 Maternity 2,873,250,423 2,742,353,492 130,896,931 Investment property 9 9,990,890,870 9,048,920,710 941,970,160 Funeral grant 2,110,240,301 2,068,204,695 42,035,606 Property and equipment 10 2,586,332,407 2,544,540,383 41,792,024 Sickness 1,607,442,254 1,573,930,453 33,511,801 Intangible assets 11 253,783,312 70,780,637 183,002,675 Medical services 45,137,519 45,858,303 (720,784) Non-current assets held for sale 12 5,339,292,619 6,477,566,822 (1,138,274,203) Special medical examinations 130,060 601,300 (471,240) Other non-current assets 13 850,695,286 3,388,414,425 (2,537,719,139) Rehabilitation services 39,270 3,001 36,269 202,862,366,619 201,505,615,780 1,356,750,839 60,746,593,155 52,122,012,435 8,624,580,720 Total assets 247,737,212,470 228,444,457,193 19,292,755,277 Operating expenses 6,819,258,195 6,379,866,882 439,391,313 LIABILITIES Total expenditures 21 67,565,851,350 58,501,879,317 9,063,972,033 Current liabilities Net revenue 12,133,212,900 6,149,620,321 5,983,592,579 Accounts payable and accrued expenses 14 2,548,893,157 1,490,001,262 1,058,891,895 Funds held in trust 15 531,190,579 489,465,900 41,724,679 Deferred income 16 56,595,201 19,611,841 36,983,360 See accompanying notes to consolidated financial statements. Other current liabilities 17 178,155,360 7,633,581 170,521,779 3,314,834,297 2,006,712,584 1,308,121,713 Accrued retirement benefits 18 1,405,721,633 1,441,877,881 (36,156,248) Total liabilities 4,720,555,930 3,448,590,465 1,271,965,465 RESERVES 19 243,016,656,540 224,995,866,728 18,020,789,812 Total liabilities and reserves 247,737,212,470 228,444,457,193 19,292,755,277 See accompanying notes to consolidated financial statements. 45 32 33
  • 19. Consolidated Statement of Changes in Reserves Consolidated Statement of Cash Flows (All amounts in Philippine peso) (All amounts in Philippine peso) Unrealized Year ended 31 December gains/ (losses) 2007 2006 on available Property for-sale valuation Contingent Donated Cash flows from operating activities Reserve fund financial assets reserve surplus property Total reserves Members’ contribution 61,829,080,748 52,543,604,359 Balance at 1 January 2006 180,022,258,018 15,076,137,150 1,164,234,712 19,746,626 5,091,980 196,287,468,486 Investment and other income 11,108,139,311 10,989,873,482 Corporate operating budget Payments to members and beneficiaries (60,647,445,958) (52,119,621,547) of Employees’ Compensation Payments for operations (6,466,651,460) (5,706,399,306) Commission and Occupational Safety and Health Center (93,151,100) - - - - (93,151,100) Operating income before changes in operating assets and liabilities 5,823,122,641 5,707,456,988 Property valuation transfer 16,867,817 - (16,867,817) - - - Revaluation increase/(decrease), net - - (5,333,425) - - (5,333,425) Decrease in operating assets Fair value gains - available-for-sale Financial assets held for trading 21,727,125 678,500,957 financial assets - 22,657,469,106 - - - 22,657,469,106 Receivables 427,108,572 640,246,179 Settlement of claims for Other operating assets 40,808,557 38,097,714 disallowed payments - - - (206,660) - (206,660) Increase in operating liabilities Net income/(expense) recognized Funds held in trust 212,246,459 98,911,027 directly in reserves (76,283,283) 22,657,469,106 (22,201,242) (206,660) - 22,558,777,921 Net cash generated from operating activities 6,525,013,354 7,163,212,865 Net revenue 6,149,620,321 - - - - 6,149,620,321 Cash flows from investing activities Total recognized income/(expense) for 2006 6,073,337,038 22,657,469,106 (22,201,242) (206,660) - 28,708,398,242 Loan releases and investment purchases, net (3,271,609,663) (7,310,762,194) Balance at 31 December 2006 186,095,595,056 37,733,606,256 1,142,033,470 19,539,966 5,091,980 224,995,866,728 Acquisition of property and equipment, net (116,747,170) (377,670,078) Acquisition of intangible assets, net (7,358,726) (720,989) Balance at 1 January 2007 186,095,595,056 37,733,606,256 1,142,033,470 19,539,966 5,091,980 224,995,866,728 Net cash used in investing activities (3,395,715,559) (7,689,153,261) Corporate operating budget of Employees’ Compensation Cash flows from financing activities Commission and Occupational Safety and Health Center (97,931,995) - - - - (97,931,995) Corporate operating budget of Employees’ Compensation Revaluation increase/(decrease), net - - 85,789,465 - - 85,789,465 Commission and Occupational Safety and Health Center (97,931,995) (93,151,100) Fair value gains - available-for-sale financial assets - 5,900,486,452 - - - 5,900,486,452 Net cash used in financing activities (97,931,995) (93,151,100) Settlement of claims for disallowed payments - - - (767,010) - (767,010) Net increase/(decrease) in cash and cash equivalents 3,031,365,800 (619,091,496) Net income/(expense) recognized directly in reserves (97,931,995) 5,900,486,452 85,789,465 (767,010) - 5,887,576,912 Cash and cash equivalents at beginning of the year 5,851,275,358 6,470,366,854 Net revenue 12,133,212,900 - - - - 12,133,212,900 Cash and cash equivalents at end of the year 8,882,641,158 5,851,275,358 Total recognized income/(expense) See accompanying notes to consolidated financial statements. for the year 12,035,280,905 5,900,486,452 85,789,465 (767,010) - 18,020,789,812 Balance at 31 December 2007 198,130,875,961 43,634,092,708 1,227,822,935 18,772,956 5,091,980 243,016,656,540 See accompanying notes to consolidated financial statements. 45 34 35
  • 20. Notes to Consolidated Financial Statements (All amounts in Philippine peso) 1. General information (c) Held-to-maturity investments Transfers to, or from, investment property are made when there is a 2.8 Impairment of assets change in use evidenced by: (a) commencement of owner occupation, The Social Security System (SSS) administers social security protection to Held-to-maturity investments are non-derivative financial assets with for a transfer from investment property to owner-occupied property; An assessment is made whether there is any indication of impairment workers in the private sector. Social security provides replacement income fixed or determinable payments and fixed maturities that the SSS (b) end of owner-occupation, for a transfer from owner-occupied of any asset, or an impairment loss previously recognized in prior for workers in times of death, disability, sickness, maternity and old age. intends and is able to hold to maturity. property to investment property; and (c) commencement of an years may no longer exist or may have decreased. If any such On 1 September 1957, the Social Security Act of 1954 was implemented. operating lease to another party, in case of transfers from non-current indication exists, the asset’s recoverable amount, which is the higher Thereafter, the coverage and benefits given by SSS have been expanded and (d) Available-for-sale financial assets assets held for sale to investment property. of the asset’s value in use or its net selling price, is estimated. An enhanced through the enactment of various laws. On 1 May 1997, Republic impairment loss is recognized if the carrying amount exceeds its Act (R.A.) No. 8282, otherwise known as the “Social Security Act of 1997”, Available-for-sale financial assets are non-derivatives that are either 2.6 Property and equipment recoverable amount and is charged to income in the period in which was enacted to further strengthen the SSS. Under this Act, the government designated in this category or not classified in any of the other it arises, or to revaluation increment if the asset is carried at revalued accepts general responsibility for the solvency of the SSS and guarantees that categories. They are included in non-current assets unless SSS Property and equipment, except land, are stated at cost less amount. A previously recognized impairment loss is reversed only prescribed benefits shall not be diminished. Section 16 of RA 8282 exempts intends to dispose of the investment within 12 months of the balance accumulated depreciation/amortization and impairment in value. if there has been a change in the estimates used to determine the the SSS and all its benefit payments from all kinds of taxes, fees or charges, sheet date. Land and buildings are appraised periodically by external independent recoverable amount of an asset, however, not to an amount higher customs or import duty. valuers. Increases in the carrying amount arising on revaluation of than the carrying amount that would have been determined (net of Regular purchases and sales of investments are recognized on trade- land are credited to property valuation reserve. Decreases that offset any depreciation), had no impairment loss been recognized for the The SSS is a financial institution in the Philippines. Its principal office is in date – the date on which the SSS commits to purchase or sell the asset. previous increases of the same asset are charged against property asset in prior years. East Avenue, Quezon City. Investments are initially recognized at fair value plus transaction costs valuation reserve; all other decreases are charged to the income for all financial assets not carried at fair value through profit or loss. statement. The carrying amount of the asset is reduced through the use of an The consolidated financial statements include the accounts of Employees’ Investments are derecognized when the rights to receive cash flows allowance account and the amount of loss is recognized in the Compensation and State Insurance Fund, which is being administered by from the investments have expired or have been transferred and the Cost includes expenditure that is directly attributable to the acquisition income statement. the SSS, as provided for by Presidential Decree No. 626, as amended. All SSS has transferred substantially all risks and rewards of ownership. of the items. Subsequent costs are included in the asset’s carrying interfund accounts have been eliminated. Available-for-sale financial assets and financial assets at fair value amount or recognized as a separate asset, as appropriate, when it is 2.9 Non-current assets held for sale through profit or loss are subsequently carried at fair value. Loans and probable that future economic benefits associated with the item will The financial statements are authorized for issue by the Social Security receivables and held-to-maturity investments are carried at amortized flow to the SSS and the cost of the item can be measured reliably. All An asset is classified as a non-current asset held for sale if its carrying Commission on 10 July 2008 under its resolution no. 388 series of 2008. cost using the effective interest method. Realized and unrealized other repairs and maintenance are charged to the income statement amount will be recovered principally through a sale transaction rather gains and losses arising from changes in the fair value of the ‘financial during the financial period in which they are incurred. than through continuing use, when it is available for immediate sale in assets at fair value through profit or loss’ category are included in the its present condition and its sale is highly probable. At each reporting 2. Summary of significant accounting policies income statement in the period in which they arise. Unrealized gains Effective 1 January 2004, the SSS implemented Commission on Audit date, a non-current asset that is held for sale is measured at the lower and losses arising from changes in the fair value of securities classified (COA) Circular 2003-007 dated 11 December 2003. The circular of its carrying amount and fair value less costs to sell. Any excess of The principal accounting policies applied in the preparation of these as available-for-sale are recognized in equity. provides policies and guidelines on the computation of depreciating carrying value over fair value less costs to sell is an impairment loss. consolidated financial statements are set out below. These policies have government property, plant and equipment. Depreciation is calculated No depreciation for these assets is recognized while classified as held been consistently applied to all the years presented, unless otherwise When securities classified as available-for-sale are sold or impaired, using the straight-line method based on the following estimated useful for sale. stated. the accumulated fair value adjustments are included in the income life of the assets: statement as gains and losses from investment securities. Dividends Non-current assets held for sale include real and other properties 2.1 Basis of preparation on available-for-sale equity instruments are recognized in the income Buildings & Improvements/ Land Improvements 10–30 years acquired (ROPA) in settlement of contribution, member and housing statement when the SSS’ right to receive payments is established. Furniture & Equipment (F&E), Computer Hardware 5–10 years loan delinquencies through foreclosure or dation in payment are The financial statements of SSS have been prepared in accordance Transportation Equipment (TE) 5 years booked initially at the carrying amount of the loan plus transaction with Philippine Financial Reporting Standards (PFRS) and Philippine The fair values of quoted investments are based on current bid prices. costs incurred upon acquisition. When the booked amount of ROPA Accounting Standards (PAS), where practicable. If the market for a financial asset is not active, the SSS establishes The residual value equivalent to ten percent (10%) of the acquisition exceeds the appraised value of the acquired property, an allowance fair value by using valuation techniques. These include, among cost/appraised value was applied to buildings while for the others, the for impairment loss equivalent to the excess of the amount booked 2.2 Cash and cash equivalents others, the use of recent arm’s length transactions, reference to other residual value is P1.00. over the appraised value is set up. instruments that are substantially the same, discounted cash flow For purposes of the Statement of Cash Flows, the SSS considers all analysis, and option pricing models making maximum use of market Leasehold improvements are amortized over the estimated useful 2.10 Revenue Recognition highly liquid debt instruments purchased with original maturities of inputs. lives of the assets or the applicable lease term, whichever is shorter. three months or less from date of acquisition as cash equivalents. Operating revenues of SSS consist mainly of contributions from The SSS assesses at each balance sheet date whether there is objective Construction in progress (CIP) represents building, building members and earnings from investments. Contributions are recognized 2.3 Supplies and materials evidence that a financial asset or group of financial assets is impaired. improvement and leasehold improvement under construction and is upon collection. Interests and discounts on interest-bearing securities In the case of loans and receivables, a provision for impairment is stated at cost. CIP is not depreciated until such time as the relevant and loans are recognized based on the accrual method of accounting. Supplies and materials are valued at cost determined on a moving established when there is objective evidence that the SSS will not assets are completed and put into operational use. However, accrual is suspended when an account becomes past due average basis. be able to collect all amounts due according to the original terms. for six months or has the basic characteristics of a loan subject to Significant financial difficulties of the debtor, probability that the 2.7 Intangible assets doubtful collection. Income from financial assets held for trading 2.4 Financial assets debtor will enter bankruptcy, and default or delinquency in payments includes all gains and losses from changes in fair value. Dividend are considered indicators that such loans and receivables are impaired. (a) Computer software income is recognized when the right to receive the payment is Financial assets are classified in the following categories: financial In the case of equity securities classified as available-for-sale, a Acquired computer software licenses are capitalized on the established. Rental income arising on investment properties and assets held for trading, loans and receivables, held to maturity significant or prolonged decline in the fair value of the security below basis of the costs incurred to acquire and bring to use the operating lease is accounted for on a straight-line basis over the lease investments and available-for-sale financial assets. The classification its cost is considered an indicator that the securities are impaired. If specific software. These costs are amortized on a straight-line terms. depends on the purpose for which they are acquired. The SSS any such evidence exists for available-for-sale financial assets, the basis over their estimated useful lives. determines the classification at initial recognition and re-evaluates cumulative loss is removed from equity and recognized in the income 2.11 Leases this designation at every reporting date. statement. Impairment losses on equity instruments recognized in (b) Licenses the income statementare not reversed through the income statement. Licenses with finite lives are shown at cost and amortized on a (a) The SSS is the lessee (a) Financial assets held for trading straight-line basis over their estimated useful lives. Licenses Leases where the lessor retains a significant portion of the risks 2.5 Investment property with indefinite useful lives are those used perpetually or for and rewards of ownership are classified as operating leases. Net A financial asset is classified in this category if acquired principally as long as there are computers compatible with them. These payments under operating leases are charged to the income for the purpose of selling in the short-term or if so designated by SSS. These consist of land and buildings held by SSS to earn rentals or for are carried at cost and tested annually for impairment. statement. Assets in this category are classified as current if they are either held capital appreciation or both. The investments are initially measured for trading or are expected to be realized within 12 months of the at cost which consists of purchase price and any directly attributable (b) The SSS is the lessor balance sheet date. expenditure. After initial recognition, the SSS uses the fair value model Leases where the SSS does not transfer substantially all the risk based on valuation by a qualified independent valuer. Gains or losses and benefits of ownership of the asset are classified as operating (b) Loans and receivables arising from changes in fair values are recognized in profit or loss in the leases. Assets leased to third parties under operating leases are period in which they arise. An investment property is derecognized on included in investment property and property and equipment in Loans and receivables are non-derivative financial assets with fixed disposal and the gain or loss is recognized as income or expense in the the balance sheet. Net rental income is recognized on a or determinable payments that are not quoted in an active market. income statement. straight-line basis over the lease term. These are classified as non-current assets and are included in financial assets. 45 36 37
  • 21. 3. Cash and cash equivalents 8. Non-current financial assets 10. Property and equipment 2007 2006 Land, buildings, land F&E, transportation 2007 2006 Available-for-sale financial assets 80,132,632,530 82,703,441,943 and leasehold equipment, computer Construction in Cash on hand and in banks 858,524,434 1,273,781,466 Financial assets held to maturity improvements hardware & others progress Total Savings/time/special Notes and bonds 39,290,285,814 31,505,418,129 Cost or valuation savings deposits 8,677,888,484 5,179,789,006 Accumulated impairment loss (675,014,035) (2,826,364) 1 January 2007 2,723,314,289 3,142,003,319 29,307,873 5,894,625,481 9,536,412,918 6,453,570,472 38,615,271,779 31,502,591,765 Additions/transfers 14,067,463 128,959,019 (1,912,103) 141,114,379 Uncashed checks (653,771,760) (602,295,114) Loans and receivable Retirement/disposals/adjustments (12,310,790) (80,714,941) (1,097,559) (94,123,290) 8,882,641,158 5,851,275,358 Members 36,550,370,728 34,348,200,360 Appraisal increase 85,789,465 - - 85,789,465 National Home Mortgage Impairment loss (24,624,000) (24,624,000) Finance Corporation 18,555,890,957 19,814,320,598 Recovery of impairment loss 3,804,000 - - 3,804,000 Cash in banks earn interest at the prevailing bank deposit rates. Time/ Home Development 31 December 2007 2,790,040,427 3,190,247,397 26,298,211 6,006,586,035 special savings deposits are made for varying periods of up to three months Mutual Fund 4,469,685,021 5,046,418,572 Accumulated depreciation/amortization depending on the immediate cash requirements of SSS and earn interest at Housing loans 4,624,976,284 4,797,280,013 1 January 2007 489,089,174 2,769,418,682 - 3,258,507,856 the prevailing time/special savings deposits rates. Commercial and industrial loans 1,121,467,018 1,702,449,575 Charge for the period 46,187,351 93,642,937 - 139,830,288 Program MADE 18,951,859 19,673,343 Retirement/disposals/adjustments (9,387,855) (47,648,936) - (57,036,791) Other government agencies 167,813,257 526,434,334 31 December 2007 525,888,670 2,815,412,683 - 3,341,301,353 4. Current financial assets held to maturity 65,509,155,124 66,254,776,795 Accumulated impairment loss Accumulated impairment loss (854,353,162) (845,147,593) 1 January 2007 91,577,242 - - 91,577,242 2007 2006 64,654,801,962 65,409,629,202 Recovery of impairment loss (12,624,967) - - (12,624,967) Sales contract receivable 438,665,854 359,729,893 31 December 2007 78,952,275 - - 78,952,275 Short-term money placements 14,963,848,841 3,054,471,880 65,093,467,816 65,769,359,095 Net book value 31 December 2007 2,185,199,482 374,834,714 26,298,211 2,586,332,407 Treasury bills 15,869,031,387 12,309,440,805 183,841,372,125 179,975,392,803 Net book value 31 December 2006 2,142,647,873 372,584,637 29,307,873 2,544,540,383 30,832,880,228 15,363,912,685 Land and buildings were last revalued in December 2006, March and October 2007 by independent valuers. Valuations were made on the basis of market value. The carrying amount of available-for-sale financial assets follows: The revaluation surplus was credited to Property Valuation in Reserves. Short-term money placements consist of time/special savings deposits with original maturities of more than 90 days. 2007 2006 Lease rentals amounting to P12.36 million in 2007 and P10.97 million in 2006 relating to buildings, respectively, were included in the income statement. Cost of marketable securities 35,989,223,854 44,460,516,921 If land and buildings were stated on the historical cost basis, the amounts would be as follows: 5. Financial assets held for trading Unrealized gain 43,634,092,708 37,733,606,256 2007 2006 79,623,316,562 82,194,123,177 2007 2006 Marketable securities - fair value 900,174,921 837,315,498 Ordinary and preference Cost 1,510,948,236 1,508,529,955 shares (at cost) 1,213,710,857 1,213,710,857 Accumulated depreciation (436,276,389) (400,267,953) The cost of marketable securities as of 31 December 2007 and 2006 are Accumulated impairment loss (704,394,889) (704,392,091) 1,074,671,847 1,108,262,002 P877,070,099 and P898,797,229 respectively. 509,315,968 509,318,766 80,132,632,530 82,703,441,943 The current portion of financial assets held to maturity at 31 December 2007 11. Intangible assets 6. Receivables 2007 2006 and 2006 are P1.8 billion and P4.2 billion, respectively. Software Licenses Total Collecting banks 2,711,159,382 3,110,485,305 Cost Interest receivable 1,382,031,862 1,577,875,332 1 January 2007 984,863,257 198,073,777 1,182,937,034 Other receivables 97,283,449 76,703,211 9. Investment property Additions/reclassifications 215,700 13,806,721 14,022,421 4,190,474,693 4,765,063,848 Land Building Total Adjustments/reclassifications (895,718,404) (10,775,648) (906,494,052) Fair value, 31 December 2007 89,360,553 201,104,850 290,465,403 1 January 2007 6,174,598,320 2,874,322,390 9,048,920,710 Accumulated amortization 7. Other current assets Transfer from ROPA 1,113,229,000 15,710,000 1,128,939,000 1 January 2007 919,308,195 192,848,202 1,112,156,397 2007 2006 Cancellation of contract - 7,809,560 7,809,560 Amortization charge for the period 54,591,227 5,603,784 60,195,011 Supplies and materials inventory 61,076,157 106,636,672 Fair value gains (losses) (212,935,710) 27,608,403 (185,327,307) Adjustments/reclassifications (947,586,347) (188,082,970) (1,135,669,317) Prepaid expenses 4,891,455 5,171,993 Disposals - (7,856,450) (7,856,450) 31 December 2007 26,313,075 10,369,016 36,682,091 Advances - officials and employees 1,413,204 8,039,731 Adjustment - (1,594,643) (1,594,643) Net book value 31 December 2007 63,047,478 190,735,834 253,783,312 Revolving fund 1,065,055 1,117,457 Fair value Net book value 31 December 2006 65,555,062 5,225,575 70,780,637 Receivable - ISSA 228,980 308,171 31 December 2007 7,074,891,610 2,915,999,260 9,990,890,870 68,674,851 121,274,024 The carrying amount of intangible assets with infinite lives at 31 December 2007 amounted to P238.51 million. The cost of investment property as of 31 December 2007 and 2006 is P7.831 billion and P6.831 billion respectively. The investment properties are valued annually on 31 December at fair value, appraised by an independent, 12. Non-current assets held for sale professionally qualified valuer. Land Building Acquired Assets Total Carrying amount, 1 January 2007 6,219,914,339 178,304,173 225,517,076 6,623,735,588 The following amounts have been recognized in the income statement: Accumulated impairment loss (140,526,000) (4,263,000) (1,379,766) (146,168,766) Net carrying amount, 1 January 2007 6,079,388,339 174,041,173 224,137,310 6,477,566,822 2007 2006 Additions 13,789,337 - 58,203,183 71,992,520 Rental income 313,916,655 292,458,663 Recovery of impairment loss 5,784,000 - - 5,784,000 Penalty on rentals 10,654,823 2,787,311 Transfer from/to land/building (12,182,500) 12,182,500 - - Direct operating expenses arising Transfer to investment property (1,113,229,000) (15,710,000) - (1,128,939,000) from investment Disposals (852,000) - (66,188,933) (67,040,933) properties that generate Impairment loss (7,220,010) (5,815,073) (657,136) (13,692,219) rental income (39,293,199) (81,245,831) Closing of excess accrual - (6,378,571) - (6,378,571) Realized gain 1,176,982 2,826,979 Carrying amount, 31 December 2007 4,965,478,166 158,320,029 215,494,424 5,339,292,619 Fair value gains/(losses) (185,327,307) 192,622,240 101,127,954 409,449,362 45 38 39
  • 22. 13. Other non-current assets d. Retirement incentive award Table 1 22. Employee benefit expense 2007 2006 Actuarial Valuation Interest receivable 12,628,368,025 12,599,179,325 Employees with at least 20 years of creditable service are entitled to Comparison of Key Projection Results 2007 2006 Accumulated impairment loss (12,588,192,747) (10,144,455,703) P2,000 for every year of service upon retirement. 2003 Valuation versus Valuation after Reforms in 2006-2007 Salaries and wages 1,807,817,980 1,796,635,576 40,175,278 2,454,723,622 Under the Baseline Scenario Mandatory contributions 1,712,543,967 942,256,132 Advances-fire/MRI/foreclosure The estimated benefit payable to employees on 31 December 2007 and Incentive and loyalty award 712,981,735 578,538,079 proceedings 250,003,613 238,318,995 2006 are as follows: Projection Milestones 2003 Valuation After Reforms Bonus and rice grant 391,652,229 386,156,435 Accumulated impairment loss (876,705) (587,558) Year Benefit Disbursements Allowances 195,637,545 207,820,382 249,126,908 237,731,437 2007 2006 exceed Contribution Collection 2015 2018 Retirement and terminal leave pay 40,896,700 125,628,000 Others 908,765,921 909,770,963 Retirement gratuity (RA 1616) 690,951,380 695,267,015 Year Portion of the Fund Other employee benefits 107,873,608 101,434,004 Accumulated impairment loss (347,372,821) (213,811,597) Terminal leave pay 631,112,682 666,259,811 starts to be used 2022 2026 4,969,403,764 4,138,468,608 561,393,100 695,959,366 Retirement incentive award 83,657,571 80,351,055 YEAR FUND WILL LAST 2031 2036 850,695,286 3,388,414,425 The increase in mandatory contributions was due to the payment of provident 1,405,721,633 1,441,877,881 fund – employer share (PF-ER) for 84 months covering the period January 19. Reserves 20. Investment and other income 2000 to December 2007 and the 5% increase in PF-ER share in January 14. Accounts payable and accrued expenses 2007. (a) Investment reserve fund (IRF) 2007 2006 2007 2006 Investment income Accounts payable Income from current investments 23. Commitments Current year 1,330,180,789 182,216,791 All revenues of the SSS that are not needed to meet the current administrative and operational expenses are accumulated in the reserve fund. Such portion Financial asset held to maturity 1,335,595,910 671,378,440 Prior year 730,845,654 783,796,642 (a) Agreement to sell of the reserve fund as are not needed to meet the current benefit obligations is Financial asset held for trading 94,661,459 630,512,741 Accrued expenses 487,866,714 523,987,829 known as the IRF which the Social Security Commission (SSC) manages and 1,430,257,369 1,301,891,181 2,548,893,157 1,490,001,262 On 28 September 2006, the SSS submitted an Application to Tender Shares invests subject to prescribed ceilings under section 26 of R.A. 8282 (the Act). Income from non-current investments in respect of its entire holdings of 187,849,591 shares in the Common Capital Available-for-sale financial assets Stock of Equitable PCI Bank, Inc. (EPCIB) pursuant to the Tender Offer of SM 15. Funds held in trust No portion of the IRF or income will accrue to the general fund of the National Investments Corporation (SMIC) in concert with its affiliates, to acquire all Government or to any of its agencies except as may be allowed under the Dividend income 2,574,253,997 1,689,544,379 Realized gain/(loss) 9,820,016,185 29,812,186 of the outstanding common shares of EPCIB. The offer period was from 29 This account represents (a) bidders’ deposits, withholding taxes and retention Act. The Act also provides that no portion of the IRF shall be invested for August 2006 to 29 September 2006. withheld from suppliers and creditors to answer for defective deliveries or any purpose or in any instrument, institution or industry over and above the Impairment loss (879,477,603) - services, (b) contributions to GSIS, PHIC, Pag-Ibig and SSS Provident Fund prescribed cumulative ceilings as follows: 40% in private securities, 35% in 11,514,792,579 1,719,356,565 In view of the Status Quo order of the Supreme Court (SC) in a case involving and (c) equity of Flexi-fund members. housing, 30% in real estate related industries, 10% in short and medium- Financial assets held to maturity the said shares (G. R. No. 165272 entitled Sergio R. Osmeña III, et. al. vs. term member loans, 30% in infrastructure projects, 15% in any particular Interest income 3,628,766,719 3,787,947,062 SSS, et. al.), SSS and SMIC executed an Agreement on 29 September 2006 The Flexi-fund represents equities of members under the voluntary industry and 7.5% in foreign-currency denominated investments. Dividend income - 62,070,125 whereby SMIC undertook to purchase from SSS and SSS undertook to sell to supplementary benefits program of the SSS for Overseas Filipino Workers, Realized gain - 3,506 SMIC the shares covered by the Application to Tender which was submitted authorized under Section 4.a.2 of R.A. 8282, for Overseas Filipino Workers. Impairment loss (954,298,509) - by SSS on the previous day. The Agreement bound the parties to purchase In its resolution no. 402-s.2007, the SSC adopted the use of acquisition The Social Security Commission, in its Resolution No. 288 dated 18 April 2,674,468,210 3,850,020,693 and sell the EPCIB shares “under the same terms and conditions of the cost of shares of stock as the basis for computing the 30% limit in equity 2001, approved the establishment of this supplementary benefits program. Loans and receivable Tender Offer provided that on or before October 2, 2008, proceedings in the investments based on the opinion dated 25 June 2007 of the Legal and Interest and penalty (net) 3,793,223,239 4,228,281,035 Supreme Court involving the Subject Shares shall be resolved with finality in Adjudication Sector of the Commission on Audit. Impairment loss (2,453,651,628) - a manner that would entitle the Seller to transact the transfer of the Subject 16. Deferred income 1,339,571,611 4,228,281,035 Shares to the Buyer.” (b) Actuarial valuation of the reserve fund of SSS Investment property 101,208,239 409,466,379 The Social Security Act of 1997 requires the Actuary of the System to This account represents advance rental payments from tenants of SSS The offer price for the acquisition of the shares is P92.00 per share, and the submit a valuation report every four (4) years, or more frequently as may be properties. Other income consideration is payable as follows: ten percent (10%) on settlement date or necessary, to determine the actuarial soundness of the reserve fund of SSS Interest income from on October 2, 2006, ten percent (10%) on June 2, 2007, ten percent (10%) on and to recommend measures on how to improve its viability. cash equivalents 397,925,464 455,893,932 February 2, 2008, with the remaining balance to be paid on October 2, 2008. 17. Other current liabilities Realized gain from non-current The reserve fund is affected by (a) changes in demographic factors (such assets held for sale (net) 127,703,787 100,707,715 The 10% downpayment and succeeding installment payments were This account represents (a) collections credited to the accounts pending as increased life expectancy, ageing of population, declining fertility level, Reversal of impairment deposited at the escrow account established by SMIC. In the event the receipt of the collecting agencies’ documents and (b) payments whose and delay in retirement) and (b) the economic conditions of the country. loss/revaluation decrease 22,921,980 63,618,805 proceedings with the SC are resolved with finality, the funds in the escrow nature are not indicated by payors. Taking into account the uncertainty of future events, economic assumptions Others 274,826,482 123,921,368 account, net of expenses and including earnings thereon shall be released on interest rates, inflation rates and salary wage increases, among others, are Impairment loss - non-current to the SSS and any remaining unpaid installment payments shall be paid in projected. assets held for sale (13,692,219) (145,262,394) accordance with the above schedule. However, if there is no final resolution 18. Employee benefits 809,685,494 598,879,426 of the proceedings with the SC by 02 October 2008, SMIC will release SSS In the 1999 Actuarial Valuation, the Social Security Fund (SSF) was projected 17,869,983,502 12,107,895,279 from any obligation to sell said shares and the funds in the escrow account a. Provident fund to last until 2015. Since then, parametric measures (e.g. increase in the shall be released to SMIC. contribution rate from 8.4% to 9.4%, increase in the maximum salary base The fund is a defined contribution plan made by both the SSS and its for contributions from P12,000 to P15,000, and the redefinition of Credited 21. Expenses by nature On 13 September 2007, the SC dismissed the case filed under G. R. No. officers and employees. The affairs and business of the fund are Years of Service), and operational developments (e.g. Tellering System, more 165272, the ruling became final and executory on 28 November 2007 and directed, managed and administered by a Board of Trustees. Upon accounts officers, cost saving measures, improved investment portfolio and 2007 2006 the Entry of Judgment was issued on 08 January 2008, the date that SSS was retirement, death or resignation, the employee or his heirs will receive management, etc.) were implemented to strengthen the SSF. Benefit payments 60,746,593,155 52,122,012,435 entitled to transfer the shares to SMIC. The transfer of the shares to SMIC was from the fund payments equivalent to his contributions, his made through a special block transaction sale on 18 January 2008. Employee benefit expense proportionate share of the SSS’ contributions and investment earnings The System’s concerted efforts have resulted in improved actuarial soundness. (Note 22) 4,969,403,764 4,138,468,608 thereon. However, effective 28 January 2005, retired and separated Results of the 2003 actuarial valuation indicate an extension on the life of (b) Operating lease commitments – where the SSS is the lessee Maintenance and other members have the option to retain his total equity in the fund for a the fund by sixteen years, from 2015 to 2031. operating expenses 1,849,854,431 2,241,398,274 maximum period of five (5) years. The SSS leases offices for its various branches under cancellable operating Maintenance and The increase in contribution rate to 10.4%, effective January 2007, has repairs - building / F&E / TE 489,287,538 541,199,667 lease agreements. The leases have varying terms, escalation clauses and b. Retirement benefits extended further the SSF to 2036, taking already into account the grant of renewal rights. The lease expenditure (Office space rentals) charged to the Light and water, communication 283,993,765 295,920,360 10% across-the-board increases in pension effective September 2006 and Service bureau expenses 280,856,217 226,366,474 income statement during the year is disclosed in Note 21. Retirement benefits are available to qualified employees under September 2007. Depreciation/amortization any one of Republic Act (RA) 1616, RA 660 and RA 8291. (c) Operating lease commitments – where the SSS is the lessor expense 194,205,250 555,889,680 Table 1 presents a comparison of the results of the 2003 Actuarial Valuation Supplies and materials 125,147,618 222,917,276 c. Terminal leave benefits The SSS leases out portion of its office spaces to various tenants under with later valuation results taken into consideration the across-the-board Office space and pension increases in 2006 and 2007 and the contribution rate increase at cancellable operating lease agreements. The leases have varying terms, This represents the cash value of the accumulated vacation and sick equipment rentals 111,761,364 110,233,192 escalation clauses and renewal rights. leave credits of employees, 50 percent of which can be monetized the start of 2007. Other expenses 285,351,999 240,345,242 once a year and the balance payable upon resignation/retirement. Impairment loss - property and (d) Capital commitments equipment/other assets 79,250,680 48,526,383 67,565,851,350 58,501,879,317 Capital expenditure for property and equipment contracted for at 31 December 2007 but not yet incurred amounted to P238.12 million. 45 40 41
  • 23. Internal Auditor’s Report Historical Data SSS COVERAGE AND PERSONNEL FORCE FOR THE YEAR* AS OF DECEMBER 31 AS OF DECEMBER 31 YEAR W E W E P W/P E/P 1959 24,719 1,211 401,769 10,956 632 636 17 1969 243,857 5,063 2,329,315 88,064 1,996 1,167 44 I 1979 612,712 11,909 7,381,193 221,000 2,328 3,171 95 n 2007, the Internal Audit Service (IAS), applying the risk-based audit approach, carefully selected projects on the basis 1989 704,665 30,358 11,775,459 327,354 3,456 3,407 95 of impact to the overall objectives of the Social Security System. 1999 1,152,049 25,894 21,325,966 573,314 4,041 5,277 142 2000 1,304,866 26,868 22,630,832 600,182 3,996 5,663 150 IAS is pleased to report that it was able to complete 27 audit projects as of 31 December 2007. Based on the audit results, 2001 901,834 33,124 23,532,666 633,306 3,942 5,970 161 the following recommendations are most significant: 2002 775,367 34,733 24,308,033 668,039 3,896 6,239 171 2003 743,201 34,535 25,051,234 702,574 4,058 6,173 173 2004 615,152 32,236 25,666,386 734,810 4,043 6,348 182 1. For a continuously growing organization with an expanding membership like SSS, the construction and renovation of 2005 561,250 23,161 26,227,636 757,971 4,169 6,291 182 branch offices should be pursued. However, it is important to have a Manual of Procedures (MOP) for the Procurement 2006 511,646 23,792 26,739,282 781,763 4,135 6,467 189 and Implementation of Infrastructure Projects that will clearly define the functions of all concerned units from the pre- 2007 501,938 21,572 27,241,220 803,335 4,145 6,572 194 implementation stage all the way to the completion phase so that requisites in bidding are followed; deficiencies are * net of termination rectified and variations/change orders are minimized; punchlist items are complied with and projects are completed Worker (W), Employer (E), SSS Personnel (P) within the agreed timeframe. 2. Tellering services should be made available to members in the provinces provided branches are given sufficient resources such as competent people, space, furniture and equipment, among others. It is also paramount that the internal controls SSS GROWTH OF ASSETS, RESERVES & INVESTMENTS of the tellering system is adequate to guard against fraud and losses of funds. While IAS recognizes that tellering was (Amounts in Million Pesos) downloaded to the branches for collection efficiency primarily, strict compliance with the MOP, the Government ASSETS RESERVES INVESTMENTS Accounting and Auditing Manual (GAAM) and Commission on Audit (COA) regulations cannot be compromised. Year AMT % INC / (DEC) AMT % INC / (DEC) AMT % INC / (DEC) 1959 68.2 67.6 66.2 3. Collection of unremitted contributions and loans will be more efficient if branches are well informed and compliant with 1969 963.2 1,312.3 953.7 1,310.8 919.7 1,289.3 the instructions of the Social Security Commissions. All branch heads, accounts officers and lawyers should be briefed 1979 6,750.7 600.9 6,641.6 596.4 6,608.6 618.6 on the said instructions for their information, guidance and strict implementation. Most importantly, development of an 1989 42,974.2 536.6 42,466.9 539.4 41,781.2 532.2 1999 159,688.2 271.6 148,633.8 250.0 151,801.8 263.3 MOP from the filing of the complaint up to termination of the case should be given priority. 2000 163,325.7 2.3 152,002.7 2.3 149,226.1 (1.7) 2001 144,823.8 (11.3) 141,957.2 (6.6) 134,521.0 (9.9) 4. SSS employees will be competent and well informed if the SSS Manual on Personnel Policies, Rules and Regulations 2002 143,098.5 (1.2) 139,660.0 (1.6) 130,967.2 (2.6) is updated on a regular basis. Appropriate action must be pursued in order to inculcate in the minds of employees that 2003 150,618.9 5.3 147,730.9 5.8 138,909.2 6.1 fraud or misrepresentations in their records for employment will not be taken for granted or taken lightly. 2004 158,007.4 4.9 155,159.4 5.0 143,304.7 3.2 2005 177,719.6 12.5 174,144.2 12.2 166,535.0 16.2 2006 205,878.6 15.8 202,316.0 16.2 187,759.5 12.7 5. Information Technology (IT) as a tool to deliver faster and better services will be efficient if IT standards, policies 2007 224,928.6 9.3 220,097.1 8.8 211,167.9 12.5 and procedures are complied with. Basic controls such as password changes, sharing of user IDs, granted rights and privileges to user IDs and accountabilities of people must be clearly spelled out. In 2008, IAS will channel its energies in audit projects dealing with remittance/posting of collections and accounting of funds; SSS PROGRESS OF OPERATIONS payment of benefits to the right persons; investments; customer satisfaction and competence and fitness of SSS employees. (In Million Pesos) This thrust is a continuation of past directions and intended to benefit our members who are the reason for our being. Operating Investment and Expenses & Year Contributions Other Income Benefits Others Net Revenue 1957 - 1959 72.5 4.0 2.8 6.1 67.7 1960 - 1969 959.9 232.3 187.9 118.3 886.0 1970 - 1979 5,122.3 2,573.0 1,511.8 495.6 5,687.9 1980 - 1989 23,081.0 29,353.0 15,058.7 1,751.6 35,623.7 1990 - 1999 154,417.9 123,034.2 152,474.4 16,091.3 108,886.4 2000 29,885.5 10,217.3 32,735.1 4,014.9 3,351.2 2001 30,912.0 12,390.1 37,813.5 4,211.5 1,277.0 ANTONETTE L. FERNANDEZ 2002 33,702.1 9,901.2 39,566.3 4,340.5 (303.5) 2003 38,634.7 11,694.6 41,622.9 4,644.8 4,061.6 Assistant Vice President 2004 43,083.6 7,530.1 43,743.3 5,192.0 1,678.4 2005 46,714.9 10,872.9 45,180.8 5,505.9 6,781.4 2006 51,633.4 10,953.0 51,051.6 6,249.1 5,285.8 2007 60,769.5 17,117.8 59,665.4 6,697.9 11,524.0 45 42 43
  • 24. Historical Data CONSOLIDATED GROWTH OF ASSETS, RESERVES & INVESTMENTS EMPLOYEES’ COMPENSATION AND STATE INSURANCE FUND GROWTH OF ASSETS, RESERVES & INVESTMENTS (Amounts in Million Pesos) (Amounts in Million Pesos) ASSETS RESERVES INVESTMENTS ASSETS RESERVES INVESTMENTS Year AMT % INC / (DEC) AMT % INC / (DEC) AMT % INC / (DEC) Year AMT % INC / (DEC) AMT % INC / (DEC) AMT % INC / (DEC) 1959 68.2 67.6 66.2 1979 507.5 501.0 489.6 1969 963.2 1,313.3 953.7 1,310.3 919.7 1,288.9 1989 5,226.7 929.8 5,226.7 943.2 5,163.0 954.6 1979 7,258.2 653.6 7,142.6 648.9 7,098.2 671.8 1999 17,186.9 228.8 17,186.8 228.8 16,535.0 220.3 1989 48,200.9 564.1 47,693.6 567.7 46,944.2 561.4 2000 18,415.3 7.1 18,406.0 7.1 16,956.9 2.6 1999 176,875.1 267.0 165,820.6 247.7 168,336.8 258.6 2001 19,303.0 4.8 19,277.1 4.7 16,494.0 (2.7) 2000 181,741.0 2.8 170,408.7 2.8 166,183.1 (1.3) 2002 19,508.0 1.1 19,887.7 3.2 18,243.8 10.6 2001 163,113.6 (10.2) 161,234.3 (5.4) 151,015.0 (9.1) 2003 20,406.4 4.6 20,406.4 2.6 17,030.5 (6.7) 2002 162,606.4 (0.3) 159,547.7 (1.0) 149,211.0 (1.2) 2004 21,226.7 4.0 21,226.7 4.0 17,195.7 1.0 2003 170,875.3 5.1 168,137.3 5.4 155,939.7 4.5 2005 22,143.3 4.3 22,143.3 4.3 15,240.4 (11.4) 2004 179,084.1 4.8 176,386.1 4.9 160,500.4 2.9 2006 22,679.9 2.4 22,679.9 2.4 17,466.1 14.6 2005 199,713.2 11.5 196,287.5 11.3 181,775.4 13.3 2007 22,919.6 1.1 22,919.6 1.1 14,397.4 (17.6) 2006 228,558.5 14.4 224,995.9 14.6 205,225.5 12.9 2007 247,779.5 8.4 243,016.7 8.0 225,565.3 9.9 CONSOLIDATED PROGRESS OF OPERATIONS EMPLOYEES’ COMPENSATION AND STATE INSURANCE FUND PROGRESS OF OPERATIONS (In Million Pesos) (In Million Pesos) Operating Operating Investment and Expenses & Investment and Expenses & Year Contributions Other Income Benefits Others Net Revenue Year Contributions Other Income Benefits Others Net Revenue 1957 - 1959 72.5 4.0 2.8 6.1 67.7 1975 - 1979 477.0 104.9 72.2 8.8 500.9 1960 - 1969 959.9 232.3 187.9 118.3 886.0 1980 - 1989 2,033.6 3,526.0 732.3 100.8 4,726.5 1970 - 1979 5,599.3 2,677.9 1,584.0 504.4 6,188.8 1990 - 1999 4,214.3 15,985.9 5,881.6 1,085.7 13,233.0 1980 - 1989 25,114.6 32,879.0 15,791.1 1,852.7 40,349.9 2000 435.0 2,123.9 1,154.1 185.7 1,219.2 1990 - 1999 158,632.2 139,020.1 158,355.9 17,177.0 122,119.4 2001 459.8 1,848.8 1,201.5 235.8 871.2 2000 30,320.5 12,341.1 33,889.2 4,202.1 4,570.4 2002 485.6 1,803.8 1,305.3 251.0 733.0 2001 31,371.8 14,238.9 39,015.0 4,447.4 2,148.2 2003 785.7 1,068.5 1,183.5 131.8 538.9 2002 34,187.7 11,705.0 40,871.6 4,591.5 429.6 2004 852.2 1,323.2 1,139.2 135.3 900.9 2003 39,420.4 12,763.1 42,806.4 4,776.6 4,600.5 2005 887.1 1,444.4 1,089.0 132.5 1,110.0 2004 43,935.8 8,853.3 44,882.5 5,327.3 2,579.3 2006 910.2 1,154.9 1,070.4 130.8 863.9 2005 47,483.4 12,316.3 46,269.8 5,638.4 7,891.4 2007 1,059.6 752.2 1,081.2 121.4 609.2 2006 52,543.6 12,107.9 52,122.0 6,379.9 6,149.6 2007 61,829.1 17,870.0 60,746.6 6,819.3 12,133.2 45 44 45
  • 25. SOCIAL SECURITY Commission Seated from left to right: Chairman Thelmo Y. Cunanan, Commissioner Sergio R. Ortiz-Luis, Jr., Vice Chairman Corazon S. de la Paz-Bernardo Standing from left to right: Commissioner Donald G. Dee, Commissioner Fe Tibayan-Palileo, Commissioner Marianita O. Mendoza, Commissioner Marianito D. Roque (vice Commissioner Arturo D. Brion), Commissioner Victorino F. Balais, Commissioner Jose Sonny G. Matula 45 46 47
  • 26. SENIOR Management Seated from Left to Right: Mr. Nazario S. Cabuquit, Jr., President and CEO Corazon S. de la Paz-Bernardo, VP May Catherine C. Ciriaco, Mr. Lucito L. Sioson, CEO IV Juanita L. Reyes, Mr. Arturo G. San Gabriel Standing from Left to Right: AVP Antonette L. Fernandez, VP Marissu G. Bugante, VP Erlinda O. del Rosario, AVP Joel P. Palacios Seated from Left to Right: AVP Josie G. Magana, VP Judy Frances A. See, AVP Aida V. delos Santos Standing from Left to Right: AVP Luis V. Olais, AVP Consolacion M. Cancio, AVP Ma. Teresa C. Ignacio, Chief Actuary and EVP Horacio T. Templo, VP Jose B. Bautista, CH Ma. Mylene M. Sanchez, AVP Naciancino L. Monreal, AVP Alberto C. Alburo Seated from Left to Right: AVP Cecilia P. Sabig, Chief Actuary and EVP Horacio T. Templo Standing from Left to Right: AVP Helen C. Solito, AVP Rodrigo B. Filoteo, VP Eddie A. Jara, AVP Emmanuel R. Palma, AVP Josefina O. Fornilos 45 48 49
  • 27. Management SENIOR Seated from left to right: OIC Leticia B. Ong, Chief Actuary and EVP Horacio T. Templo, VP Judy Frances A. See, VP Cecilia C. Canlas Seated from left to right: AVP Lilia S. Marquez, SVP Edgar B. Solilapsi, AVP Ma. Luz C. Generoso Standing from left to right: AVP Agnes E. San Jose, AVP Vicente A. Curimao, Jr., VP Mario R. Sibucao, Standing from left to right: AVP Mariano Pablo S. Tolentino, Special Assistant to Executive Officer AVP Antonio S. Argabioso, AVP Alma R. Fausto Emmanuel A. Trinidad, Deputy Chief Actuary and AVP Rizaldy T. Capulong, VP Gamelin Z. Oczon Seated from left to right: VP Reynaldo R. Venzon, VP Nicholas C. Balbuena, Chief Actuary and EVP Horacio T. Templo, AVP Celia B. Tiongson, SVP Miguel E. Roca, Jr. Seated from left to right: OIC Anita A. Villena, AVP Jesse J. Caberoy, AVP Daisy S. Real, SVP Amador M. Monteiro, OIC Aurea G. Bay, VP Alfredo S. Villasanta Standing from left to right: Special Assistant to the Executive Officer Reynaldo C. Oriel, OIC Milagros E. Floranda, Deputy Chief Actuary and AVP Rizaldy T. Capulong, Standing from left to right: OIC Joselito A. Vivit, AVP Santiago Dionisio R. Agdeppa, VP Antonio G. Maralit AVP Renato M. Custodio, OIC Nestor R. Sacayan, AVP Milagros M. Pagayatan 45 50 51
  • 28. SSC & SSS Management Directory SOCIAL SECURITY COMMISSION ERLINDA O. DEL ROSARIO JOSEFINA O. FORNILOS Controllership Division Northern Mindanao Cluster THELMO Y. CUNANAN Chairman EDDIE A. JARA MA. LUZ C. GENEROSO Visayas and Mindanao Groups Loans Program Division and CORAZON S. DE LA PAZ-BERNARDO Concurrent Head of Member Loans Program Vice-Chairman ANTONIO G. MARALIT Department Planning & Research Division VICTORINO F. BALAIS MA. TERESA C. IGNACIO DONALD G. DEE GAMELIN Z. OCZON Bicol Cluster JOSE SONNY G. MATULA Treasury Division MARIANITA O. MENDOZA JOSIE G. MAGANA SERGIO R. ORTIZ-LUIS, JR. JUDY FRANCES A. SEE NCR North Cluster FE TIBAYAN-PALILEO Coverage and Collection Program Division and MARIANITO D. ROQUE Concurrent Head of International Affairs and Branch LILIA S. MARQUEZ Members Expansion Division Institutional Loans Department SSS MANAGEMENT MARIO R. SIBUCAO NACIANCINO L. MONREAL Member Assistance Center Program Management Branch Support Services PRESIDENT and CEO Department LUIS V. OLAIS CORAZON S. DE LA PAZ-BERNARDO REYNALDO R. VENZON Luzon North Cluster President and Chief Executive Officer Applications Systems Division REYNALDO C. ORIEL EXECUTIVE VICE PRESIDENT ALFREDO S. VILLASANTA Special Assistant to the Executive Officer, Branch & EQUIVALENT RANK Office and General Services Division Operations Sector HORACIO T. TEMPLO ASSISTANT VICE PRESIDENT, EQUIVALENT MILAGROS M. PAGAYATAN Chief Actuary & RANK & CLUSTER HEAD Commission Legal Staff II/ Executive Vice President for Acting Commission Secretary/ Clerk of the Branch Operations Sector SANTIAGO DIONISIO R. AGDEPPA Commission Cluster Legal Support Unit NAZARIO S. CABUQUIT, JR. JOEL P. PALACIOS Special Assistant to the President and CEO ALBERTO C. ALBURO Media Affairs Department NCR Central Cluster ARTURO G. SAN GABRIEL EMMANUEL R. PALMA Special Assistant to the President and CEO ANTONIO S. ARGABIOSO Southern Mindanao Cluster Contributions Collection Program Management LUCITO L. SIOSON Department DAISY S. REAL Special Assistant to the President and CEO Competency & Performance Management Department JESSE J. CABEROY SENIOR VICE PRESIDENT Human Resource Management Division JUANITA L. REYES Corporate Executive Officer IV, AMADOR M. MONTEIRO CONSOLACION M. CANCIO Office of the President and CEO Legal and Collection Group NCR South Cluster CECILIA P. SABIG MIGUEL E. ROCA, JR. RIZALDY T. CAPULONG Western Visayas Cluster Information Technology Management Group Deputy Chief Actuary, Actuarial Department and Concurrent Head of Securities Trading and GWEN MARIE JUDY D. SAMONTINA EDGAR B. SOLILAPSI Management Department Technical Support Division Investments Group VICENTE A. CURIMAO, JR. MA. MYLENE M. SANCHEZ VICE PRESIDENT Medical Operations Department Luzon Central Cluster NICHOLAS C. BALBUENA RENATO M. CUSTODIO AGNES E. SAN JOSE Chairperson: VP May Catherine C. Ciriaco Computer Operations Division Commission Legal Staff I Retirement, Death and Funeral Program Management Department Vice-Chairperson: VP Marissu G. Bugante JOSE B. BAUTISTA AMELITA C. DELA TORRE Luzon Group General Accounting Department HELEN C. SOLITO Members: VP Jose B. Bautista Central Visayas Cluster MARISSU G. BUGANTE AIDA V. DELOS SANTOS VP Erlinda O. del Rosario Public Affairs and Luzon South Cluster CELIA B. TIONGSON AVP Antonio S. Argabioso Special Events Division Operations Accounting Division AVP Rizaldy T. Capulong ALMA R. FAUSTO AVP Ma. Luz C. Generoso CECILIA C. CANLAS Medical Program Division MARIANO PABLO S. TOLENTINO Ms. Aurea G. Bay Benefits Program Division Asset Management Department Atty. Joselito A. Vivit ANTONETTE L. FERNANDEZ MAY CATHERINE C. CIRIACO Internal Audit Services Division EMMANUEL A. TRINIDAD Consultant: Mr. Arturo G. San Gabriel Management Services Division and Concurrent Head Special Assistant to the Executive Officer, Investments of Corporate Policy and Planning Office RODRIGO B. FILOTEO and Finance Sector Secretariat: Ms. Grace B. Burgos Western Mindanao Cluster Ms. Mylene H. Lorica Mr. Virgilio M. Macapagal Ms. Guia O. Ongchangco Ms. Karen I. Quieta Mr. Jogar B. Tosoc 45 52