Friday, February 13, 2015

Coverage and Computation of SS & EC Monthly Contributions

Before we proceed to the illustrations of the computation of Social Security (SS) and Employee Compensation (EC) Monthly Contributions, let us consider the following glossary of terms:


Primary beneficiaries - the primary beneficiaries who shall be entitled to the benefits are the dependent spouse until he or she remarries and the dependent legitimate; legitimated or legally adopted, and illegitimate children, subject to the certain conditions.

Secondary beneficiaries - the secondary beneficiaries who shall be entitled to the benefits in the absence of the primary beneficiaries are the dependent parents. In the absence of dependent parents, any other person designated by the member subject to certain conditions.

Contribution - the amount paid to the Social Security System (SSS) by and on behalf of the member.

Monthly Salary Credit (MSC) - The compensation base for contributions and benefits related to the member's total earnings for the month, as indicated in the schedule in Section 18 of the SS Law.
Non-working spouse - a person legally married to a currently employed and actively paying SSS member who devotes full time in the management of household and family affairs may be covered on a voluntary basis provided there is approval of the working spouse. The person should never have been a member of the SSS.

Overseas Filipino Worker (OFW) - a Filipino recruited in the Philippines by a foreign-based employer for employment abroad; having source of income in a foreign country; and permanent resident in a foreign country.

Self-employed member - a person who has no employer other than himself and derives income from his physical and mental effort.

SS Form E-1 (Personal Record) - a person registering with the SSS for the first time as a prospective employee should accomplish this form.

SS Form E-4 (Member's Data Amendment Form) - Changes in the member's record should be reported immediately to the nearest SSS office by accomplishing this form.

UMID (Unified Multi-Purpose Identification Card) - a card which contains a contactless chip and magnetic stripe that stores information and can be used when transacting with participating government agencies such as SSS, GSIS, Pag-IBIG and PhilHealth.

Voluntary Member - a member who is separated from employment or ceased to be self-employed/overseas Filipino worker/non-working spouse and would like to continue paying his/her contributions.

What services are exempt from compulsory coverage as employee? 

1. Casual employment
2. Government service
3. Employment of single proprietor in his own business

Who are covered under the EC program?

All SSS-registered employers and their employees are compulsorily covered under the program.
Employers and employees registered in the SSS need not register again under EC.

How much is the monthly EC contribution?

Only the employer is required to remit monthly EC contributions on behalf of the employees, equivalent to one per cent of the employee's monthly salary credit. The required contribution under the current rate is P10.

How long is an employer obliged to pay for the EC contributions of his employee?

For as long as the employee works for him/her employer is obliged to pay EC contributions.

The obligation of the employer ceases when an employee is separated from employment or, if the employee dies during employment.

When a covered employee becomes disabled during employment, the employer's obligation to pay the monthly contribution arising from the employment will be suspended during such months that the employee is not receiving salary or wages.


 ILLUSTRATIONS (Under Employer - Employee Relationship-Corporation):

Assuming that an Employee is receiving a Monthly Basic Salary or Earnings (Net of Absences, Late, Overtime) amounting to Php.18,000.00, the Employer-Employee SS & EC Total Monthly Contributions is with details as follows:

* Please refer to the SSS Schedule of Contributions:
Range of Compensation: 15,750 – over
Monthly Salary Credit: 16,000

SS ER Contribution (Contribution of the Employer):                       1,178.70

SS EE Contribution (Deduction to Employee Payroll)                           581.30   1,760.00

EC ER  Contribution (Contribution of the Employer on behalf of the Employee):               30.00    

TOTAL ER & EE MONTHLY CONTRIBUTION:       1,790.00         

NOTE: If the employee(s) has no compensation or earnings for the applicable month, the employer is not required to remit or pay monthly contribution but it is required to report to the SSS that the employee(s) has no compensation or earnings.

Rate of Contributions to SSS

The monthly contributions are based on the compensation of members ( Please see table SSS Schedule of Contributions). The current SSS contribution rate is 11% of the monthly salary credit not exceeding P16,000 and this is being shared by the employer (7.37%) and the employee (3.63%).

Self-employed and voluntary members pay the 11% of the monthly salary credit (MSC) based on the monthly earnings declared at the time of registration.

For OFWs, the minimum monthly salary credit is pegged at P5,000.

For the non-working spouse, the contribution will be based on 50% of the working spouse(s) last posted monthly salary credit but in no case shall it be lower than P1,000.

Due Dates of Contributions

For Employed members

It is necessary to be aware of the payment deadlines for contributions and member loans in order to avoid incurring penalties. If you are an employee-member, your employer must pay your contributions and member loans monthly in accordance with the prescribed schedule of payment which is according to the 10th digit of the Employer's ID Number. Late payments will result to penalties and delays in the processing of your benefits and loans.

The frequency of payment is on a monthly basis for business and household employers.
For Self-employed and Voluntary members

If you are a self-employed or a voluntary member, the prescribed schedule of payment is also being followed, (depending on the 10th (last digit) of the SE/VM SS number). However, the frequency of contribution payments for self-employed or a voluntary member can be on a monthly or quarterly basis. A quarter covers three (3) consecutive calendar months ending on the last day of March, June, September and December. Any payment for one, two or all months for a calendar quarter may be made.

For OFWs

Payment of contributions for the months of January to December of a given year may be paid within the same year; contributions for the months of October to December of a given year may also be paid on or before the 31st of January of the succeeding year.

Due Dates of Loan Payments

For member loans, payment should be made monthly in accordance with the prescribed schedule of payment which is according to the 10th digit of the SS ID/Number.

Please refer for updates and other concerns related to this.

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