Change in accounting standards led to P843 billion net loss, SSS says

ByForest Midden

May 25, 2022 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

[ad_1]

Social Security System (SSS) president and chief executive officer Michael Regino has clarified the net loss of P843.9 billion shown in its unaudited financial statements for 2021 is a result of a change in accounting standards brought by Philippine Financial Reporting Standards (PFRS) 4.

He, however, assured members and pensioners that the said reported losses do not affect the SSS’ current cash flow and funding situation and it remains financially viable in providing benefits to its stakeholders.

SSS cash inflows composed of contribution collections and investment and other income for 2021 reached P262 billion, exceeding its cash outflows of P234 billion composed of benefit payments and operating expenses for the same year.

“This increase in net loss from the previous year is due to the recognition of the margin for adverse deviation (MfAD) in our policy reserves.  MfAD serves as a buffer for conservatism, which we have considered in our financial statements beginning 2021,” Regino said.

Policy reserves are forward-looking estimates of net future liabilities. These include benefit payments that will be disbursed to SSS members and their beneficiaries in the future.

“These future liabilities need to be recognized now as these provide us an accurate view of our long-term financial standing, which serves as our guide, as well as for the government in ensuring that we will be able to continuously serve our current and future members and their beneficiaries,” Regino said.

The SSS is a state-run social insurance institution that extends social security protection to Filipino workers in the private and informal sectors.

Under the Social Security Act of 2018, it provides seven benefit programs namely Sickness, Maternity, Unemployment, Retirement, Disability, Death, and Funeral, as well as loan privileges.

[ad_2]

Source link