When to Restart Paying the Maximum SSS Contribution

Is it wiser for individual payors to stop paying SSS in the meantime, and then restart paying maximum SSS monthly contributions just before age 55?

Many younger OFW and voluntary members of SSS have been asking us this question.
They say that since pension computation is largely based on the average of the last 60 monthly salary credits before semester of retirement, it’s more practical for them to stop paying SSS for a while and then re-start paying the maximum SSS contribution just before they turn 55.

What are their reasons for asking?
They came to know of these SSS rules:
  . SSS largely uses the last 60 monthly salary credits before semester of retirement for computing pension*.
. Individual payors younger than 55 are allowed to increase their monthly contribution to any higher salary bracket

These younger individual payors say that since they’ve already accumulated 120 monthly contributions and are already qualified for pension, it’s better for them to use their premium payment elsewhere, and continue paying their SSS premiums just before they turn 55.
Our comments:

Yes, this plan might be wise, but consider also these things:

1. The total number of years of contributions also increases the pension amount.

The number of Credited Years of Service (CYS) is also part of the pension formula used for a lot of pensioners:
300 + 20% of Average Monthly Salary Credit + 2% of AMSC x (CYS – 10)

Always take note though that paying lower contributions just to increase your CYS is not wise. Doing this will reduce your AMSC, especially if these low contributions are within your last 60 monthly salary credits.

2. If you like to avail of SSS sickness, disability, maternity or salary loan programs, you need to be active payors.

The common requirement is payment of a certain number of contributions within the past 12 months.

3. If we have children or parents who depend on us, we need to ensure that they get the biggest death pension that they can get in case we pass away at a younger age.

But if we have adequate life insurance policies, these might cover a lower pension.


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