Ep. 198: The SSS Benefit For Your OFS Explained

Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at outsourcing to the Philippines. This is episode 198, the SSS benefit explained. So every time I mention SSS, I get a lot of questions and it affects a lot of their life in the Philippines. So in this podcast I'm going to explain a whole bunch about it. There are a lot of things to know. It's not that complicated. And really, in the end, paying it. Adding this as a benefit for your OFS isn't difficult. Just so you know, it's optional. This is totally optional. I didn't do this for years after I hired someone. So yeah, here we go. Number one. SSS stands for Social Security System. It's a state run social insurance program where non governmental Filipino workers are expected to contribute to it. Businesses in the Philippines are required, legally required, to contribute to SSS on behalf of their employees. Now, you don't have a business in the Philippines, or at least most people listening to this do not have a business in the Philippines. So you are not required to contribute. Actually, you're not even able to contribute to sss, but your workers contributing to it is optional, although they should be. If you're looking to give a benefit to your workers and you can only afford one of them, I really strongly encourage sss. It has a really wide range of good things for them. Okay, so because you don't have a business in the Philippines, you can't sign up for sss, you can't make contributions, you can't pay it for them. Your OFS has to sign up on their own. And when they sign up for sss, they get a government issued ID called a UM id. It's a universal multi purpose id. And my team tells me it's one of the, one of the best IDs that you can have in the Philippines because it's like one of the few IDs that are recognized everywhere. Having it, having a UMID makes it easier to open a bank account, verify their identity online. It gets you, it allows you to get easy access to a credit card or a passport or a driver's license. This is a really good ID for them to have. Next, when your OFS pays into sss, it creates a pension fund that they can use when they retire. And that pension obviously is dependent on how much they've paid into it over the years. It's also how Philippines are maternity benefits are paid, disability benefits or calamity benefits. So, and I'll talk about more about these in a different podcast. But SSS is how all of those things are handled. SSS is also an easy way for Filipinos to take out loans. So most Filipinos take out an SSS loan first to establish credit for themselves. The SSS loans acts as like a record of paying something back so they can show it to a bank later on if they want to get a bigger loan. Like something beyond what SSS will do. So now for your ofs, when they register as when they register for sss, they're going to make their payments voluntarily. And that's an important piece of this is all of they declare their contributions to SSS as voluntary because they're not working for a Philippines employer. When, if you were to pay sss, which you can't because you don't have a legal entity in the Philippines, your contributions would be required. Theirs are voluntary because they don't work for a legal entity in the Philippines. They need to make those payments on their own. You can't make them for them. So how much do these payments cost? Well, SSS premiums are about 13% of the salary, up to a maximum of 3,250 Filipino pesos per month. That's about right Now. That's about US$58 per month as a maximum contribution. So to make this simple, multiply the salary that you're paying your OFS times 0.13. If that amount is over 58, cap it at 58 if you want to give this benefit. If it's under 58, that's the amount that they need that they should be contributing to SSS each month. So now if you're interested in giving this benefit to them, you can pay that entire amount or a portion of it, so you can make the entire contribution for them or you can make, you can pay a portion of it. So actually, in the Philippines, the standard is for companies to pay 2/3 of this. So that would be like 8 and a half percent, and the worker pays the other 4.5% or the other 1/3. So if your worker is making more than like $445 a month, which most people are, the maximum contribution is $58. And so that 8.5% works out to be about US$39 per month. So if you wanted to give this benefit to them and you wanted to pay the 2/3 like most employers do, you would add $39 to their salary each month. They can then contribute that 39. They can add their own 19 out of pocket to make the maximum $58 contribution. And since their contributions are voluntary, you can kind of do this however you want. They can make their payments monthly, quarterly, annually. With our team, what we do is we ask them to make the contributions and send us a receipt, and then we reimburse. We reimburse their salaries or I'm not actually sure how we do that because I don't deal with the payments. We may give them the payments ahead of time and then ask them to give us a receipt after. And they don't actually have to have a physical receipt. They can just take a screenshot of the payment record from their account. So as they go to contribute this, something to keep in mind is that the more they contribute, the more benefits they'll get, the more payouts they'll get. When they get. If they ever have a disability claim or for maternity or they're eligible for a loan, they're eligible for a bigger loan from SSS or their pension is bigger. They can keep track of their contributions or apply for the loans or the disability benefits or whatever, all through the SSS member portal or through the SSS mobile app. And then we have instructions for them for how to sign up with SSS that's available to them through their onlinejobs PH account. It's all pretty straightforward and it's a really, really helpful thing for. Well, really, every Filipino should be paying into sss.