SOCIAL SECURITY SYSTEM

2 0 1 0 a n n u a l r e p o r t

KabaliKat sa tuwid na landas

sa Pagbangon ng Pilipinas

About the CoverKabalikat sa Tuwid na Landas sa Pagbangon ng Pilipinas

For 53 years, the Filipino has in the Social Security System of the Philippines or the SSS an ally, a partner and a friend. Through its valuable aid and assistance programs, the institution has become a key player in the government’s program of nation building. Our cover features an SSS member and his family, the recipient of SSS benefits, programs and services. He is a symbol of the care and protection that SSS aims to provide its network of members nationwide. A bright tomorrow for the SSS member is promised as depicted by a backdrop of a modern, progressive cityscape; a long straight road symbolizes the nurturing support of SSS which is in line with the new administration’s “Tuwid na Landas”.

SOCIAL SECURITY SYSTEM

2 0 1 0 a n n u a l r e p o r t

KabaliKat sa tuwid na landas

sa Pagbangon ng Pilipinas

Highlights of Operations

Employees’ Compensation and State Insurance Fund

For the Year Increase/(Decrease) 2010 2009 Amount %A. REVENUES & EXPENDITURES

Revenues 2,147.35 2,181.26 (33.90) (1.6) Contributions 1,315.87 1,183.94 131.92 11.1 Investment and Other Income, net 831.49 997.31 (165.83) (16.6) Expenditures 1,186.33 1,192.86 (6.53) (0.5) Benefit Payments 1,086.02 1,086.03 (0.02) (0.0) Operating Expenses 100.31 106.83 (6.51) (6.1) Net Revenue/(Loss) 961.02 988.40 (27.37) (2.8) B. ASSETS & RESERVES

Assets 26,431.84 24,827.91 1,603.93 6.5 Investments 20,635.03 19,721.92 913.12 4.6 Others 5,796.81 5,106.00 690.81 13.5 Liabilities 0.06 0.05 0.01 11.8 Reserves 26,431.79 24,827.86 1,603.92 6.5

Consolidated

For the Year Increase/(Decrease) 2010 2009 Amount %A. REVENUES & EXPENDITURES

Revenues 107,120.75 95,336.51 11,784.24 12.4 Contributions 79,272.86 72,350.89 6,921.97 9.6 Investment and Other Income, net 27,847.89 22,985.62 4,862.28 21.2 Expenditures 84,288.57 79,124.55 5,164.02 6.5 Benefit Payments 77,174.16 72,049.96 5,124.20 7.1 Operating Expenses 7,114.41 7,074.59 39.82 0.6 Net Revenue/(Loss) 22,832.19 16,211.96 6,620.22 40.8 B. ASSETS & RESERVES

Assets 297,591.34 272,610.65 24,980.69 9.2 Investments 273,265.61 248,641.45 24,624.16 9.9 SSS Properties 3,318.75 3,413.69 (94.94) (2.8) Others 21,006.98 20,555.52 451.47 2.2 Liabilities 8,496.31 7,280.83 1,215.47 16.7 Reserves 289,095.03 265,329.82 23,765.22 9.0

Social Security System

For the Year Increase/(Decrease) 2010 2009 Amount %A. REVENUES & EXPENDITURES

Revenues 104,973.40 93,155.25 11,818.15 12.7 Contributions 77,956.99 71,166.95 6,790.04 9.5 Investment and Other Income, net 27,016.41 21,988.30 5,028.10 22.9 Expenditures 83,102.24 77,931.69 5,170.55 6.6 Benefit Payments 76,088.14 70,963.92 5,124.22 7.2 Operating Expenses 7,014.10 6,967.77 46.33 0.7 Net Revenue/(Loss) 21,871.16 15,223.56 6,647.60 43.7 B. ASSETS & RESERVES

Assets 271,267.54 247,891.34 23,376.20 9.4 Investments 252,630.57 228,919.53 23,711.04 10.4 SSS Properties 3,318.75 3,413.69 (94.94) (2.8) Others 15,318.21 15,558.12 (239.91) (1.5) Liabilities 8,604.29 7,389.38 1,214.91 16.4 Reserves 262,663.25 240,501.96 22,161.29 9.2

(Amounts in Million Pesos)

Contents01 Highlights of Operations02 Statement of Mission and Vision

Messages03 Message of the President of the Republic

of the Philippines 04 Message of the SSC Chairman06 Message of the SSS President and CEO

2010 in Review 10 Changing of the Guards11 Expressing Corporate Social Responsibility12 Forging Partnership for Better Service13 Nurturing Relationships with Stakeholders14 Developing SSS Employees15 Celebrating SSS’ 53 years

Special Articles 16 Implementation of the Condonation Law

on Penalty on Contributions17 The UMID: Its Mandate19 2010 SSS Family Day20 2010 Staffing and other Human Resource

Management Directions21 The SSS Museum and SSS Library22 SSS In 2011 and Beyond: Heeding the

Call for Transformational Change

Financial26 Statement of Management’s Responsibility

for the Financial Statements27 State Auditor’s Report on the Financial Statements

28 Statement of Financial Position29 Statement of Comprehensive Income30 Statement of Changes in Reserves31 Statement of Cash Flows32 Notes to Financial Statements 45 Internal Auditor’s Report 46 Historical Data

Management48 Photo of the Social Security Commission50 Photos of the SSS Senior Management55 SSC and SSS Management Directory57 Photo of Annual Report Committee and

Secretariat

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My warmest greetings to the Social Security System on the publication of your 2010 Annual Report.

I commend the SSS in your more than 50 years as a key partner of government, fulfilling our collective mission to improve the lives of our people. Through the protection that you provide your members and your programs supporting their respective enterprises, your institution has proved crucial not only to the public welfare but also to our common goal of revitalizing the economy. It is my fervent hope that you will carry on in your thrust to empowering our citizenry and making them vital participants, as we set out to rebuild our country in this daylight of hope.

We have the momentum to sustain this movement for national transformation, to report our government and society and to restore our country’s place in the community of nations. Let us stay united as one people in realizing our dream of a stable, progressive Philippines.

BENIGNO S. AQUINO III

of the President of the Republic of the Philippines

MessageStatement of MissionThe mission of the SSS is spelled out in Section 2 of the Social Security Law (Republic Act No. 1161), as amended by the Social Security Act of 1997 (Republic Act No. 8282):

“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 needs of the people throughout the Philippines, which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to workers and their beneficiaries.”

Statement of VisionThe SSS aims to develop and promote a viable, universal and equitable social protection scheme through world-class service.

VIABLE means that it is financially sustainable, non-distortionary, and requires no government subsidy. Current and future generations of workers and retirees are also assured of meaningful benefits in return for their contributions.

UNIVERSAL means that protection shall be provided to all residents of the Philippines, citizens and non-citizens alike, regardless of race, creed, gender, age, geographic location and socio-economic status. Attention will be given specially the disadvantaged and overseas Filipino workers (OFWs).

EQUITABLE means fair and uniform coverage shall be made available to all. Benefit entitlements shall be closely linked with contributions.

WORLD-CLASS SERVICE means that the highest standards of service shall be used to ensure total member satisfaction. A multi-skilled, forward-looking and generalist SSS workforce shall provide service that is prompt, accurate and courteous.

TUWID NA LANDAS AGENDA:

1. Transform the organization and its employees;

2. Simplify/Innovate to reduce corruption and improve efficiency; and,

3. Optimize resources.

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The year 2010 was a promising one. We witnessed a turning point in our national history that heeded the call for genuine change in society filled with hope.

The Social Security System is an ideal template for one to renew his enthusiasm and entrepreneurial spirit. A government financial institution immersed with the working man’s vision of perpetual social protection. The SSS is energetic, professional and has achieved and still much capable of attaining greater heights that can make a real difference in our country.

So it was with great honor that I accepted the challenge, after spending nearly four decades of my professional life using whatever management and leadership skills I honed in the private sector while steering the course of the biggest food company in the country.

The historic change in national leadership in 2010, together with laudable performance of the SSS allowed the net revenue of the fund to soar from Php16.21 Billion in 2009 to Php22.83 Billion in 2010.

The new Commissioners of the Social Security Commission, together with the highly-capable President and Chief Executive Officer look forward to further improve the health of the fund, inspired by the commitment and efforts of its competent and

dedicated officers and employees who had toiled throughout the decades for the benefit of its current members and their beneficiaries and future generations.

Also in 2010, the Social Security Commission laid down policies to put in effect the laws passed by Congress, R.A. No. 9903 or the Social Security Condonation Law of 2009 and R.A. No. 9507 or the Socialized and Low-Cost Housing Restructuring and Condonation Program. These two laws were designed to encourage employers and member-borrowers to update their records with SSS, while benefitting from the condonation of accumulated penalties and loan restructuring schemes.

The implementation of the Member Loan Penalty Condonation Program for Employers restored employees’ access to benefits and privileges that SSS provides for its members while allowing member-employers to update and remain compliant.

Further initiatives are likewise underway to encourage non-paying members to return to the fold through intensive coverage drives directed at local government units, government agency partners and special sectors all over the country. The OFW Caravan will also send several hard-working commissioners, together with SSS officials and staff, to conduct drives in key countries with high concentrations of overseas Filipino workers to bring in other coverable employed members to the fold.

A commitment to strike a balance between our corporate goals and institutional responsibilities is magnified through the policies that the present Commission formulates and passes. More than just strengthening the fund’s financial condition through optimum compliance, realizing investment earnings thru prudent investment mechanisms of the SSS and advancing economic and social development, the Commission is determined to adhere to the principle of promoting social justice in the country.

The SSS workforce expresses its support and adherence to the Quality Policy of the SSS, in line with the mandate of the Citizen’s Charter where a commitment to provide prompt, convenient, reliable and meaningful social protection services to our current and future members and their beneficiaries is emphasized. We also commit to follow international standards and the Anti-Red Tape Act in rendering service to our constituents through continuing improvements of our work processes founded on good governance, public accountability and transparency.

The SSC will continue to initiate policy reforms to remove needless obstacles that are counter-productive to the concept of universal coverage. The board committees composed of Audit, Investment Oversight, OFW Coverage, Information Technology, and Coverage and Collection strengthens communication lines with management and amplify the thrust of this Commission as an enabler of worthy plans and programs.

I am confident that we can sustain this positive growth as we all work together towards a bigger, better and more professional SSS for our members.

On behalf of my fellow Commissioners, I thank the Management and all the hardworking officers and employees for their remarkable work and steadfast commitment to the SSS.

JUAN B. SANTOS

Message of the ChairmanRESPONDING TO A SUBLIME ADVOCACy

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Magic Key that Opens Countless Doors

In 2010, when I accepted the position as President and CEO of the SSS, I knew what I was getting into. I knew that if there is any place where one’s mettle for service is truly tested, it is in government service where the challenges are often multifold and where time and resources are always not enough to get the job done. I knew that leading a public institution that is as challenging and as complex as the SSS with over 28 million membership is not going to be easy. I knew that I have to chart a roadmap that will serve as our guidepost in refreshing the institution, reinvigorating its sense of mission and reaffirming its mandate of social protection.

My resolve to serve was bolstered by a magic key that helped me to steer SSS to the direction where it should go. This was President Benigno S. Aquino III’s “matuwid na daan” which opened a lot of challenges and opportunities that signaled that 2010 was the propitious time to intensify work in the SSS and to regain its focus.

So while I recognize what my predecessor did, that is, bringing SSS to its prime position in the field of social security which was indeed no mean feat, we started work. We moved to fortify SSS financial standing by enhancing our financial viability through reinforced investment portfolios. We improved our operations through enhancing our service capabilities through delineation

of functions in some areas of the organization and through the use of the latest computer technology. We also enhanced our benefits and privileges to our members through growth in our earnings and resources. And we moved to create a more humane and responsive social security for all generations to come for all Filipinos in all parts of the world.

SSS as Bastion of Civic Responsibility

Workers all over the country have different stories to tell, yet their stories share a common theme. This is – that every hard-earned peso is needed in the present time. Essentials such as food, shelter, clothing, and, if possible, education, cannot be put off for tomorrow. Worst, more often than not, there is seldom enough money left over to prepare for the unpredictable, but imminent future.

But the future will come. That is the harsh reality of life and it will not always be rosy and bright when it arrives. Breadwinners may fall ill, debilitating accidents may occur, and the youthful intensity and vigor with which we work today will someday give way to old age.

In the midst of all these, social security fund is probably the least expensive yet most feature-rich insurance package a worker will ever find and can rely on to tide him over until times become normal.

I would like SSS to be always ready to attend to our members in times like these – making sure that benefits and privileges are not only adequate to the basic minimum level but also given expeditiously and without unnecessary effort on the part of the claimant. I would like SSS employees to be in the position to assure all our valued members that we will walk with them through economically trying times, that we will assist them in every way we can so that they can fully avail themselves of the benefits and privileges due them. I would like the whole SSS workforce to make our members feel that SSS is their stronghold, their bastion of hope, theirs and their loved ones’ security for a better future.

Despite the immensity in breadth and scope of the work, 2010 saw our commitment to pursue our mandate with dedication and zeal. We were ever forward-looking and started putting in place social protection strategies specifically in the following requisite action areas: social security coverage expansion; more meaningful benefits; investments optimization; continuous improvement of our work processes following international standards in service delivery to qualify for ISO certification from international certifying body; adherence to the SSS Quality Policy in line with the mandate of the Citizen’s Charter; organization re-engineering; and, charter amendments pursuit, among others.

I made the whole workforce cognizant of the fact that the road towards these may be a long and arduous one. The SSS employees felt the heavy load, too. yet we agreed that we will not hesitate to take that road, for the reward of an enduring SSS is well worth it.

Contribution Collections

In 2010, collection of contributions continued to rise to a record-high of over 79 billion pesos as compared with over 72 billion pesos in 2009. This was realized through the implementation of RA 9903 or the Social Security Condonation Law of 2009 and RA 9507 or the Socialized and Low-cost Housing Restructuring and Condonation Program. Efforts of collecting delinquent member contributions and loan amortizations were intensified and the installment payment scheme and dacion-en-pago guidelines for delinquent employers were revised to liberalize installment terms. This strategy brought in over a billion pesos that exceeded the target of 900 million pesos.

This increase in contribution collection was also attributed through the expansion of the coverage of the public transport sector and the seafarers when a partnership between the Land Transportation Franchising Regulatory Board (LTFRB) and the Philippine Overseas Employment Administration (POEA) was forged. Another source was the completion of the agreement

Message of the President and CEOREDEFINING THE DYNAMICS OF SOCIAL SECURITY

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between SSS and Portugal that provided voluntary social security coverage to Filipinos residing in that country. The marked increase in contribution collection was complemented by expanding the network of e-payment facilities that ensures steady inflow of collection.

Benefit Payments

SSS paid over 77 billion pesos worth of benefits to its members reflecting a seven per cent increase in 2010 from the previous 72 billion pesos released in 2009. The bulk of the releases went to retirement and death claims which accounted for nearly 85 per cent of total disbursements for the year. Parallel to this, measures to strengthen control in benefit payments were undertaken to ensure that the right benefits were afforded to the right beneficiaries at the right time. These measures were through the following programs: Enhanced Annual Confirmation of Pensioners; Revisions in the New Disability Program; Expansion of Sickness, Maternity and Employees Compensation (SMEC) payments through the banks; conduct of meetings with the banks for the Electronic Data Interchange (EDI); Database Clean-up as a result of erroneous contingency date, mismatched records in claims information, employee static and pension database.

Surge in Investments Income

SSS optimized its investments and managed to post a moderate of over 27 billion pesos worth of investment income which was 34 per cent higher than the targeted 20 billion pesos for 2010. Bulk of the income was contributed by SSS investments in government securities and equities that amounted to over 22 billion or 82 per cent of the total investment income. The SSS has also begun efforts to implement a trading system for equities and other tradable investments. It has also started exploring prospective foreign investments for diversification.

SSS has also engaged in developing programs that aimed to improve the management of member loans. We have started closing our Direct Housing Loan Program while establishing the guidelines for the implementation of the Member Loan Penalty Condonation Program for Employers. The full-scale implementation of RA 9507 or the Socialized and Low-cost Housing Loan Restructuring and Condonation Act has likewise greatly improved SSS’ liquidity. It is notable, however, that the ratio of the social benefits through increased ownership and liberalizing access to home loans far outweighs financial profits.

Improved Service Delivery vis-a-vis Lean Spending

In line with the government’s campaign for enhanced public service and observance of judicious spending measures, SSS showed a lower actual operating expenditure recorded at 7.11 billion pesos compared with the projected figure of 8.65 billion for 2010.

As countries in the world achieve higher levels of economic development, their social security systems also advance in parallel, extending the scope, level and quality of benefits and services provided. SSS lives with this principle as it started implementing RA 9485 or the Anti-Red Tape Act (ARTA) where the step-by-step processes of its operations as well as the ideal processing time are laid out. It also provided a yardstick within which to measure the performance of our frontline services.

In line with this was the beginning of the efforts to inculcate in the consciousness of every SSS employee the essence of the Quality Policy and the significance of the continual improvement of the work processes and orienting them in installing the Quality Management System (QMS) in our operations as a requirement towards ISO certification by an international certifying body.

Our effort in upgrading our Information and Communication Technology (ICT) system was notably a huge success. Twelve of its application systems from BSS to M9000 servers have already been migrated and completed. The new server allows the enhancement of online capabilities while ensuring data integrity through stricter server security. Microfilming of our members’ records has also been started to enhance functionality and accessibility.

SSS has deployed and installed 290 ID card readers in different branches to facilitate faster transactions and eliminate fraudulent claims. These card readers are compliant with the specifications of the Unified Multi-Purpose ID (UMID) system. SSS, as member of the core group, has participated in various technical working meetings and seminars to ascertain the smooth transition of the SS ID to the UMID system. The UMID, which aims to streamline, harmonize, and unify existing ID systems in the government, has been envisioned as the government’s springboard in infusing the benefits of ICT to improve public service.

I and the rest of the SSS workforce have been made aware that we have much to be grateful for, and that we still have much to strive for.

Nurturing Competence and Professionalism in the Organization

The transformations that are unfolding in the country serve as a constant reminder of the need to keep the skills and competence of our employees abreast with the evolving social security needs of our constituents. Based on what we have experienced, progress happens by fits and starts, zigzagging upward with many reverses. This is why in a complex organization such as the SSS, we need effective, balanced people who know how to adapt to this dynamics. In the corporate world, highly successful people are not so much those who are experienced in terms of years of tenure as much as those who are effective. They are not so much those who are determined as much as those who are

disciplined. And they are not so much those who are brilliant as much as those who are balanced. We have a huge membership to serve so we have to have a workforce who looks at service as not merely a task but a calling, a privilege and an honor.

2010 was the year when efforts to reinvigorate the human resource machinery happened. This was through the implementation of the Staffing Plan by promoting and absorbing deserving employees as well as upgrading and reclassifying executive positions. It was also in this year that various training programs were implemented to enhance the technical skills of the whole workforce.

The new Performance Evaluation System (PES) was also designed in order to enhance institutional productivity. This was followed by the development of a PES customized for the executives.

On a lighter side, we encouraged our employees to indulge in various athletic, cultural and arts appreciation activities to renew camaraderie, foster teamwork and develop unifying spirit and just have fun.

Exhortation

The greatness of a nation does not only depend on the advancement of its technologies, the expanse of its conquests or the wealth inside its coffer. The greatness of a nation lies in the moral fiber of its number one resource – its people. In the same breath, I would like to exhort everyone in the SSS that we be guided by this adage. While we work hard to improve the management of our assets, enhance fiscal standing and efficiency in our work processes, post remarkable growths in all areas of operations, adapt to the ambivalent socio-economic landscape of the country, or even earn the status of being the economic backbone in the field of social security, still the

most important thing is to be unified by a common purpose, a common commitment. Challenges are enormous. Speed is critical, therefore, focus is key.

As SSS enters 2011, it braces itself to face more challenges even while we thank our valued members and their beneficiaries, our pensioners, our partner banks and other business partners, the SSS personnel, the Social Security Commission, and His Excellency President Benigno S. Aquino III for their unrelenting support, trust, confidence and inspiration.

We commit to continue to rejuvenate the SSS by infusing innovative and productive strategies that would secure the health of our funds while we make our operations respond to the call of the government towards transformation. We are confident we shall be able to build a groundswell of support for our efforts, for we look at this as a rewarding endeavor.

I exhort everyone in SSS to feel a winner – never giving up. A wise man says: “The one who finishes the race is not the strongest of all but the one who never gave up.”

EMILIO S. DE QUIROS, JR.

MEssAgE Of ThE PREsidENT ANd CEO

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GROWTHPROPELLING NATIONAL

THROUGH EFFICIENT SERVICES

2010 iN REViEW

Changing of the Guards

The year 2010 was marked by a change of government leadership of the country, after the May 2010 elections. With President Benigno S. Aquino III at the helm, the entire nation rallied support for his call for reforms and to follow “ang matuwid na landas” (the straight road). A change of leadership of the SSS also ensued in 2010, with veteran banker and insurance executive Emilio S. de Quiros, Jr. appointed as SSS President and Chief Executive Officer by President Aquino. The head may have changed, but the mandate of SSS remains the same: provide meaningful protection to members and their families against the hazards of life.

Expressing Corporate Social Responsibility

Corporate Social Responsibility is not just a passing trend or once-a-year event in SSS; it is a serious and continuing commitment by both the management and workforce to exercise good corporate citizenship by helping the lesser privileged through community work and public service. For the SSS employees, their passion for volunteer work found fruition in the SSS Kabalikat ng Bayan Volunteer Corps, which conducted humanitarian missions in various cities throughout the year, some of which were sponsored by SSS as an institution.

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Forging Partnerships for Better Service

The SSS cannot perform its mandate of service alone. Despite the breadth of its reach, SSS still requires partnerships with other agencies and institutions so that social security benefits and services meet the members’ needs in a timely and accurate manner. In 2010, SSS continued developing and enhancing its electronic and Internet-based-services in order to serve members faster and easier. The SSS management also met with other social security, business and economic experts during various conferences to share ideas, knowhow and experiences in order to improve services, policies and programs.

Nurturing Relationships with Stakeholders

Employers, individual members (whether based inside or outside the country), and pensioners: these are among the important stakeholders that SSS must always keep in mind as it continues to improve its programs, enhance its services, extend its coverage, or strengthen its fund life. After all, without these stakeholders, SSS would not have lasted all these years.

2010 iN REViEW

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Celebrating SSS’ 53 years

The SSS celebrated its 53rd Anniversary on 01 September 2010. Anchored on the theme “SSS: Kabalikat sa Tuwid na Landas sa Pagbabangon ng Pilipinas”, this celebration highlighted SSS’ continued commitment in promoting the welfare of all Filipino workers and their families, alongside the government’s efforts to eliminate poverty and improve the quality of life of every Filipino through good governance.

Developing SSS Employees

Going hand-in-hand with strengthening SSS as an institution is developing the skills and knowledge of its employees, as well as looking after their well-being. In 2010, the SSS Rationalization program was fully implemented, which saw the reorganization of key units in the main office and branches, the realignment of positions and job levels, as well as the absorption of long-serving service bureau personnel into the regular workforce.

2010 iN REViEW

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The success of the program was brought about by the conduct of a massive information campaign–both at national and local levels. The campaign consisted of print replacements; brochures and flyers; posters, banners and streamers; press releases; and radio/TV interviews. The guidelines for the Program were published in the SSS website and intranet.

The implementing rules provided measures that ensure the protection of the rights of SSS members. Should the settlement of contributions through full payment or installment result in additional benefits for contingencies that have occurred prior to the date of settlement or shall occur within the installment period, the employer shall pay the SSS damages in accordance with the provision of the Social Security Act.

Although the availment period for the Condonation Program has already ended, a delinquent employer may still avail of other payment modes either under SSC Circular No. 6-P (Amended Dacion en Pago pursuant to Res. No. 29 dated 16 January 2002), or Circular No. 2011-002 (Revised Guidelines in the Installment Payment Scheme for Employers pursuant to Res. No. 976-s.2010 dated 08 December 2010).

IMPLEMENTATION OF THE CONDONATION LAW ON PENALTY ON CONTRIBUTIONS

Republic Act No. 9903, otherwise known as the “Social Security Condonation Act of 2009,” was signed into law by former President Gloria Macapagal-Arroyo on 07 January 2010. It took effect on 01 February 2010. Pursuant to the law, the Social Security Commission (SSC), under its Resolution No. 110 s.2010 dated 10 February 2010, issued the rules and regulations for the effective implementation of the said Act.

Under the said condonation law, any employer who is delinquent on his payment or has not remitted all contributions due and payable to the SSS, must, within six (6) months from its effectivity, (a) remit said contributions; or (b) submit proposal to pay the same in installment within a period not exceeding forty-eight (48) months.

As of 02 August 2010, the last day of the six-month availment period, a total of 24,043 employers availed of the Program, with total obligation of P3,545,916,077 and condoned penalty of P3,423,935,010. Of those who availed, 15,591 (65%) employers with total obligation of P710,345,281 (20%) paid in cash, while 8,451 (35%) employers availed of an installment scheme where the current obligation of P500,118,723 (14.1%) was paid in cash, and the remaining obligation of P2,335,452,073 (66%) to be paid on installment basis. Excluded from the count of availees are those “who, before the effectivity of the Act, have settled all contributions but with accrued penalties” or those whose obligation consists of penalty only. The penalties of employers who belong to this group are condoned by operation of law.

SPECIAL EVENTS.

PROJECTS.SPECIAL

SSS as lead agency: From SS card to UMID

Initially, the National Economic Development Authority (NEDA) took the lead in conceptualizing the machinery of UMID up to the preparation of the initial draft of the implementing Rules and Regulations (IRR). In 2008, however, an amendment to EO 420-s,2005 was issued identifying the social security Identification system as the core of the UMID and directing the SSS to lead in its implementation. This is because in 1998, the SSS acquired a fingerprint biometric-based system for the social security card. Over 11 million social security cards, so far, had been generated and issued through this system until April 2010 when card production was stopped due to facility breakdown.

The social security card has gained integrity as a reliable ID card. Through the years, banks, business establishments, the courts and other government agencies, including the passport-issuing office use this for identification of its holder, who transacts business with them.

The SSS endeavored to upgrade its system, factoring in the availability of new technologies that observe international standards, similar to the machine-readable travel documents by the International Civil Aviation Organization.

After painstaking efforts to upgrade the system that uses biometric technology and fingerprint matching to determine a person’s identity, an over-all system design came to the fore with the concurrence of UMID participating-agencies. This UMID card has three core components:

(1) The CRN, the unique number generated and assigned by the central verification system to an individual upon successful enrollment into CRN Registry. CRN is needed for cross-verification to ensure integrity and reliability of identification. Once assigned, the CRN is permanent;

(2) The CRN Registry, which contains the records of individuals enrolled and assigned with CRN; and

(3) The UMID Card, the secured medium which contains the CRN. This can be presented by the individual as proof of his identity.

The data to be collected and recorded by the UMID participating-agencies are the following:

(1) Name; (2) Home Address; (3) Sex; (4) Picture; (5) Signature; (6) Date and place of birth; (7) Marital status; (8) Names of parents; (9) Height; (10) Weight; (11) Two index fingers and two thumbmarks; (12) Any prominent distinguishing features; and (13) Taxpayer Identification Number.

THE UMID: ITS MANDATE

The UMID stands for “Unified Multi-Purpose Identification.” This idea was initiated by the Executive Department of the National Government and the effort was reinforced through the issuance of an Executive Order (EO) No. 420 s.2005, that mandated all government agencies and government-owned and controlled corporations to streamline and harmonize their ID system.

UMID aims to:

(1) reduce costs and thereby lessen the financial burden on both the government and the public brought about by the use of multiple ID cards and the maintenance of redundant databases containing the same or related information;

(2) ensure greater convenience for those transacting business with the government and those availing of government’s services;

(3) facilitate private businesses and promote the wider use of the unified ID card;

(4) enhance the integrity and reliability of government-issued ID cards; and

(5) facilitate access to, and delivery of, quality and effective government service.

The UMID system includes minimum safeguards, as follows:

(1) The data to be recorded and stored, which shall be used only for purposes of establishing the identity of a person, shall be limited to those specified in the EO;

(2) In no case shall the collection or compilation of other data in violation of a person’s right to privacy be allowed or tolerated;

(3) Stringent systems of access control to data in the identification system shall be instituted;

(4) Data collected and stored for this purpose shall be kept and treated as strictly confidential. A written authorization of the Owner of the identification card shall be required for access and disclosure of data as well as for any correction or revision of relevant data, or under such conditions as the participating agency issuing the identification card may prescribe; and

(5) The identification card to be issued shall be protected by advanced security features and cryptographic technology.

The UMID is not a national ID nor is it compulsory to all Filipino citizens. It will be issued only for the constituents of the participating agencies – Social Security System (SSS), Government Service Insurance System (GSIS), Philippine Health Insurance Corporation (PHIC), and National Home Mortgage Finance Corporation (NHMFC). Licenses issued by the Land Transportation Office (LTO), Professional Regulation Commission (PRC), and ID issued in conformity with treaties and international law, like passports and seaman’s ID, are excluded in the system. These agencies, however, may join the UMID, if they so desire, by adopting the Common Reference Number (CRN) into their own system and by following other legal pertinent requirements.

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18 192 0 1 0 A N N U A L R E P O R T

The corresponding ID number issued by the participating agencies and the CRN shall form part of the stored ID data in the CRN Registry. The custodian of the registry is the National Statistics Office (NSO).

The task is to move from the social security card, the core of the System to UMID card, to the one-look, one-format card for all. The dimension of both cards complies with the ISO standards. The social security card is basically teslin, while UMID is Polyethylene Terephthalate Glycol/Poly Vinyl Chloride (PETG/PVC). The former is 2D-barcode-based, while the latter is a contactless card. Both cards are with a guaranteed life of five years.

The data that appear on the front side of both card the Republic of the Philippines, the face and ghost image of the member, his full name and his signature. The printing of birthdate is optional in the social security card, but mandatory in the UMID. The social security card shows the social security number of the member, while the UMID shows the CRN. The address of the member is not printed on the social security card, while it is in the UMID card. There is a magnetic stripe on the back side of both cards, basically for ATM-type of transactions.

The UMID System: Its Targets

All participating agencies are allowed to undertake enrollment or data capture subject to the set of enrollment standards developed by the National Technical Working Group for record formats of demographic and biometric data. Prior to deployment of enrollment stations, the compliance with such standards shall undergo a test by a conformance laboratory and a Certification process. For its part, the SSS deployed 131 enrollment stations in 95 SSS branches which have an individual capacity of 70 captures per day on an eight-hour basis.

All outputs by the enrollment stations are inputs to a central verification system (CVS). The CVS employs a civilian automated two-fingerprint identification system (AFIS). The accuracy requirement of the AFIS is 99.5% true accept rate and 0.01% false accept rate. The “True Accept rate” is the percentage of times the AFIS correctly verifies a true claim of identity. On the other hand, “False accept rate” is the percentage of times the AFIS produces a negative claim of identity. In statistics, the former is the probability of acceptance given that the claim of identification is true, while the latter refers to the probability that the claim is false. The CVS has a matching speed of 1,000 enrollments per hour 24/7. The 11.5 million person-records in the old SSS AFIS were already migrated in the CVS. The capacity of CVS with Blade System as primary server, is scalable up to 25 million person-records within five years.

Upon successful enrollment, the applicant shall be issued with CRN. For practical reasons, the agreed upon CRN-format adopts the algorithm in the social security number. The CRN and the enrollment data shall be sent to the card production system. All participating agencies can establish its own card factory.

In the case of the SSS card production system it has a Card Management System (CMS) that maintains ID card applications and a Key Management System (KMS) which grants the authority to load application in the card. The KMS has the capability to implement Public Key Infrastructure (PKI) solutions. The card chip operating system can run applications which are developed by third-parties. This is another initiative by the National Government.

The use of the UMID card may be in the form of visual inspection, a one-to-one AFIS verification through an ATM machine, or a contactless card reader.

The UMID targets: 70 enrollments per eight-hour day; 25 million enrollees in five years; and 12 million UMID cards in five years. As a matter of strategic procedure, priority shall be given to those who have no social security card yet.

2010 SSS FAMILY DAY

The SSS Family Day is an annual System-wide activity that encourages camaraderie and the strengthening of the relationship and familiarity among SSS employees and their families. The 2010 SSS Family Day mirrored such an interaction and the SSS compound became a venue for what we considered as a momentous and joyful event the memory of which we shall always treasure.

The 2010 SSS Family Day for the Main Office was concluded in four (4) separate events. This was divided into four (4) groups, namely (1) the Social Security Commission and President’s Group, (2) IT Management Group and the Program Manage-ment Group, (3) the Controllership Group and Branch Opera-tion (Corporate Offices), and (4) the Administration Group and Investments Sector.

The Social Security Commission and President’s Group con-ducted theirs at the MAC building, Diliman, Quezon City on 20 November 2010. Major activities included installing a photo booth, parlor games and entertainment/videoke-singing. The group had a total of 339 attendees. (322 employees and family members).

The IT Management and the Program Management Groups, respectively, conducted their Family Day at the SSS Canteen, Main Office Bldg., Quezon City on 26 November 2010. Major activities included bingo sosyal, raffle draw, fun games, and videoke-singing. The group had a total of 465 attendees. (438 employees and family members).

The Controllership Group and Branch Operations (Corporate Offices) conducted their Family Day at the SSS Main Office Building (Front Lobby) on 20 November 2010. Major activities included film showing, raffle draw, team activities, and photo souvenir. The group had a total of 534 attendees. (275 employ-ees and family members).

The Administration Group and Investments Sector conducted their family day at Club Manila East Resort and Hotel at Taytay, Rizal on 20 November 2010. Major activities included parlor games and water sports, cheering contest, videoke challenge raffle draw and swimming. The group had 570 attendees. (458 employees and family members).

There were a total of 1,891 regular employees, Service Bureau and Job Order personnel who attended the SSS Family Day. Over-all the number of attendees including family members were 1,510.

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2010 STAFFING AND OTHER HUMAN RESOURCE MANAGEMENT DIRECTIONS

The implementation of the Staffing Plan which started in 2009 paved the way for another milestone in the implementation of the SSS approved Rationalization Plan.

One of the roll-out activities was to gradually fill-in the vacant positions created as a result of the restructuring and the movements and separation of employees, over a period of ten years. The initial phase of the staffing plan focused on the absorption of qualified and deserving Service Bureau personnel as directed by the Social Security Commission through SSC Resolution No. 509, s. 2009 which led to the regularization of 1,131 SBs and the promotion of 68 rank and file employees.

In 2010, a total of 1,089 positions were filled through the promotion and lateral transfer of 853 regular employees, absorption of 206 SB personnel and direct-hiring of 30 external applicants for technical and specialized positions as well as promotion of qualified and deserving Officers-in-Charge (OICs) to 117 executive positions.

An assistance plan was implemented by the Management to further support the SBs preparation to complete their qualification requirements. This assistance included the conduct of review sessions for CSC Examination and Qualifying

and Specialized Examinations, scheduling for CSC Professional eligibility examination and counseling for their college academic course completion.

Human Resource Management (HRM) Division’s priorities focus on the review and enhancement of job functions and qualification requirements of plantilla positions and in the formulation of intensified approaches to training and development programs. This is pursuant to the call of the Management to streamline and automate processes towards enhanced governance and operational efficiency that would redound to meeting members’ expectation and satisfaction.

Along with these, the new Performance Evaluation System for both Executives and Rank & File employees will be ready for implementation before the end of 2011. This will ensure the continuous improvement of individual and organizational performance and will serve as basis for performance-based personnel actions (promotions, training & development, scholarships) and incentives and rewards. Likewise, the implementation of the Human Resource Information System (HRIS) will address critical human resource and organizational requirements and ensure maximized productivity of the SSS workforce.

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THE SSS MUSEUM AND SSS LIBRARY:

More than repositories of artifacts and documents

Visiting a museum is often stereotyped as an activity confined to those going on a school trip or for members of the middle or upper classes. In reality, however, a trip to a museum can be enjoyed by all and can be both a pleasurable and educational experience. The primary role of a museum is to be a source of education, whether through showcasing collections of cultural products such as pieces of art, telling the story of something important, such as an historical event, or raising awareness of a societal concern, such as poverty. The goal of a museum is to ensure that upon leaving, each visitor knows something that they did not know when they entered.

The documentary materials held in museums constitute a vast resource. At a minimum, they consist of institutional records, operational and personnel records, documentation of collections, manuscripts and photographs – in short, the historical memory of an institution and its activities. Museums generally collect, preserve, use and house artifacts for the benefit of society. Museums can be chartered as independent, non-profit organizations, or in special cases, as part of a corporation.

On 01 September 2010, as part of its 53rd Anniversary celebration, the SSS inaugurated its twin facilities for the public: the new SSS Museum and the expanded SSS Library. Located at the basement of the SSS Main Office in Diliman, the two facilities serve as more than a repository of documents, paintings or memorabilia. They are the institutional memory bank of the SSS.

The SSS Museum is a special kind of museum in that it holds original documents, printings, photographs and other memorabilia that show a vivid picture of the SSS and the development of social security in the Philippines.

Meanwhile, the SSS Library, formerly housed at the 12th floor of the Main Building, was moved to the basement in a more spacious area beside the SSS Museum in response to the growing number of users interested in social security. The SSS Library contains an expansive collection of books, magazines, journals, and other reference materials on social security, business and economics, social sciences, labor, and law. Publications from the World Bank, the International Labour Organization, the International Social Security Association, and other international institutions are likewise available.

As a way to cater to the information needs of the public, both the SSS Museum and Library have no entrance or user fees. The SSS Museum is open to visitors from Tuesdays to Fridays, 9:00 am to 5:00pm, and Saturdays, 9:00am to 12 pm. Meanwhile, the SSS Library is open from Tuesdays to Fridays, 9:00 am to 6:00pm.

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HEEDING THE CALL FOR TRANSFORMATIONAL CHANGE

Truly, 2010 was the year of transformation as the nation faced a decisive point to ameliorate the helm of the country. As soon as the first automated elections concluded the historic endeavor, the Philippines became a realm of reform as the new administration has made transformation as the cornerstone of its agenda.

As such, the arising transformational trend immediately crawled its way through the labyrinths of the government as the different institutions and agencies of the state like the SSS embraced the refreshing direction.

For its part, the SSS witnessed a major change in its leadership as it welcomed a new set of stewards who are expected to steer the fund to greater heights. Building on the foundations of transformational change, the SSS is geared to continue pursuing its mission of promoting the country’s development through the provision of meaningful social protection and sound investment decisions.

This year, the SSS is poised to revitalize its idea of service delivery by concentrating its efforts on six action areas identified by the renewed management: (1) Expand Social Security Coverage, (2) Make SSS benefits more meaningful, (3) Optimize investments, (4) Improve service delivery, (5) Re-engineer the organization, and (6) Pursue charter amendments.

Expand Social Security Coverage

As the country’s premier social security provider, the role of SSS in raising the level of coverage to social security in the country is vital. Every attempt to keep SSS closer to the members must be astute to, gradually, achieve its vision of universal coverage to social security in the country.

In 2011, the SSS shall embark on heightened efforts of stimulating members to actively pay their contributions and regain their entitlement to the package of benefits under the social security program through the expansion of payment schemes and self-service terminals. Inspired by the efficiency of today’s technology, the SSS shall continue to empower its members by providing easier access to information on their social security through the expansion of various self-service facilities. Moreover, the SSS shall continue to forge partnerships with various government and non-government institutions for the coverage of special sectors as well as continue accrediting cooperatives and associations as collecting agents to boost collections.

Driven by the insurance principle that gave expression to the solidarity of workers and employers, the SSS aims to increase the participation of both parties in securing a viable social security protection. SSS shall pursue on increasing the existing monthly salary credit to PHP 20,000. Also, an increase in the contribution rate by 0.6 percent that will be equally shared between the covered employee and employer will also be pursued to rev up the financial viability of the fund and keep it at par with its international counterparts. Furthermore, the SSS plans to increase its collection efforts on erring employers through the implementation of the revised installment payment and dacion-en-pago guidelines.

The arising trend on labor migration in the Philippines is also highlighted in the planned priorities of SSS in 2011. In this regard, SSS plans to serve the growing number of overseas Filipino workers (OFW) by opening more foreign branches in countries mostly flanked by our migrant workers. In addition, the SSS will also review the manning levels of existing foreign branches to increase the efficiency of each of these branches. The welfare of our sea-based members will also be prioritized through the development and implementation of the revised policy requiring their mandatory coverage to SSS. Moreover, the SSS shall pursue on forging a memorandum of agreement with the Department of Labor and Employment and the Philippine Overseas Employment Administration on the attempt of mandatorily covering both newly hired and rehired OFWs. SSS also intends to delineate the functions of its Foreign Operations, International Affairs and Online Support Services, which, in the meantime, are the departments catering to all the transactional needs of OFW members.

Make SSS Benefits More Meaningful

The advent of a revitalizing change promulgated by the new administration inspired state agencies and institutions like the SSS in incorporating the newfound advocacy in performing their respective mandates. With this, the SSS will further its earnest commitment in providing meaningful benefits to its members by developing policies and programs that would reaffirm the role of SSS as a reliable partner in times of distress.

In this regard, the SSS shall develop a voluntary provident fund program for the retirement of local workers benchmarked from the success of retirement programs of various agencies as well as the existing provident fund program of the OFW members of SSS. This endeavor is envisioned to be a means of promoting individual savings as a catalyst of growth.

In 2011, the SSS shall introduce new policies that would ascertain our prompt response to the growing call for transformational change in the country through better public service. These policies will revolve within the bounds of better administration of benefits and more efficient delivery of

service. In particular, the SSS is determined to implement the new Disability Program, the enhanced Annual Confirmation of Pensioners, and the new guidelines on the Funeral Benefit of members. This year will also mark the full implementation of the Anti-Red Tape Act that will ensure fast delivery of SSS services to its members while expanding the Branch Queue Management System which aims to manage the queuing system of the SSS as transacting stakeholders crowd our offices.

Optimize Investments

The change of the national stewardship last year paved way to the renewal of investor sentiment in the country evidenced by the record high performance of the local bourse as well as the surging inflow of foreign portfolio investments. The SSS will harness the benefits of this opportunity to enhance the productivity of its investments which play a crucial role in the well-being of the fund.

This year, SSS is looking at tapping the expertise of local fund managers in identifying the most optimal investment strategy for SSS as well as establishing a benchmark in evaluating the performance of the adapted strategy. Moreover, the SSS is ardent on upgrading its trading system complemented with state-of-the-art facilities that will further bolster its equities income.

The government’s advocacy of promoting economic development in the country by forging partnership with the private sector will also be heeded by SSS through optimizing its institutional lending facility as an alternative investment outlet. This endeavor will allow the SSS to balance its bureaucratic commitment and its institutional responsibilities.

Improve Service Delivery

The SSS is cognizant of its duty to provide its members with more value to their social security. With the magnitude of transactions within the institution, a complex system of information and communication technology (ICT) is vital to improving the efficiencies and maintaining the integrity of the institution.

This year, the SSS shall embark on efforts to re-engineer the business processes of the system as well as deploy the appropriate ICT resources needed in the frontline and backroom services. Also, the SSS plans to instigate the automation of office procedures through the implementation of the Automated Records Management System. This is crucial to the goal of SSS in providing faster and more accurate delivery of services by reducing human intervention in its procedures.

As we strive to develop and maintain the trust of our members, it is imperative that the SSS upholds utmost integrity of its database. The SSS shall revive its database clean-up project

SSS IN 2011 AND BEYOND

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24

FINANCIAL2010

STATEMENTS

SOCIAL SECURITY SYSTEM

which aims to correct inaccurate member information which is crucial in determining the level of benefits that a member can be entitled with. To boost its efforts in upholding the integrity of its database, SSS shall establish links with the databases of other government agencies which will also serve as a ground for cooperation in achieving overall improvement of public service. This inter-agency cooperation is also in time with the plans of SSS to fully implement the Unified Multi-Purpose Identification System in its transactions.

Along with the synchronized efforts of extending access and ensuring the viability of social security, improving service delivery through the employment of the proper ICT makes the SSS one step closer to achieving its mandate of universal coverage to social security in the country. This only proves that the ICT structure is considered the backbone of efficient SSS operations.

Re-engineer the Organization

Last year marked the changing of the guards of the country’s premiere social security provider. The highest policy making body and the chief executive post of the SSS was rejuvenated with highly-experienced individuals chosen for their sheer competence and fervor to lead the fund towards greater success. As a result, the call for a system-wide reinvigoration was accentuated to respond to the changes in the bureaucratic and corporate environment.

In this regard, the SSS is set to implement an appropriate organizational structure responsive to times as well as establish an organization-wide performance evaluation system benchmarked on the best practices of other agencies and organizations. Inspired by the ergonomic design of private banks, the SSS shall review the functions as well as the layout of its branches to determine the standards in improving service delivery to its members.

These programs are the working manifestations that the SSS is ardent in responding to the rousing call for transformational change within the country’s bureaucracy.

Pursue Charter Amendments

As we continue to scout for ways to advance the social security protection in the country, the charter that dictates our very purpose must also be receptive to the changing times. The charter itself must institutionalize the ability of SSS to respond and innovate as changes occur in the context of social security in the Philippines.

With this, the SSS shall undertake measures to pursue its charter amendments to keep it abreast with the growing social security demands of the country. We will be attentive to these needs as we finalize our recommendations on the charter amendments. To ensure the incessant progress, we will actively participate in public hearings and dialogues concerning our charter’s amendments.

Conclusion: Responding to the Eminent Call

Over the years, SSS has remained consistent with its efforts of enhancing the insurance fund of its hardworking members. With the advent of transformational reforms, the coverage of our efforts have extended from simple social security coverage to promoting the social security in the country through impeccable and professional delivery of service and more meaningful benefits to our members. Indeed, the SSS is dedicated to help its members maximize each hard-earned peso to secure a stable future for him and his beneficiaries.

26 272 0 1 0 A N N U A L R E P O R T

The Management of Social Security System is responsible for all information and representations contained in the consolidated

financial statements as of December 31, 2010 and 2009. The financial statements have been prepared in conformity with the

accounting principles generally accepted in the Philippines, and reflect amounts that are based on the best estimates and informed

judgement of Management with an appropriate consideration to materiality.

In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to

ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition, and

liabilities are recognized.

The Social Security Commission reviews the consolidated financial statements before such statements are approved and submitted

to the President of the Philippines and to the Congress of the Philippines.

JUAN B. SANTOS EMILIO S. DE QUIROS, JR. ELVIRA G. ALCANTARA-RESAREChairman, SS Commission President and CEO Officer-in-Charge Controllership Division

The Social Security CommissionSocial Security System East Avenue, Diliman, Quezon City

We have audited the accompanying financial statements of Social Security System, which comprise the statement of financial position as at December 31, 2010, and the statement of comprehensive income, statement of changes in reserves and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

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 Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Reponsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International 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 misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures 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 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 reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Bases for Qualified Opinion

As reported in Observation Nos. 2, 4, 5, 6, 7 and 8 of the audit report, the accuracy of the Receivable - Member Loans (ML), Housing Loan and Receivable-Real and Other Property Acquired (ROPA), Regular Real Estate Loans (REL), Receivable - Collecting Bank-Regular, Cash Collecting Officer (CCO) and the Cash in Bank (CIB) accounts with balances of P43.292 billion, P5.255 billion, P3.502 billion, P3.044 billion, P683.706 million and P11.041 million, respectively, cannot be ascertained due to, among others:

• CollectionsfrommembersofP5.793billionthatwerenotyetdeductedfromtheirloanaccounts,ofwhichP3.586billionweredistributedbasedonestimate and without corresponding posting to members’ accounts, and the P926.714 million variance between the general ledger and aging schedule;

• RELrepaymentsofP2.018billionremainednotrecordedorpostedtotheledgers,andtheRELregularaccountwerenotdisabledintheRELSystemwhen these were restructured and new accounts were created, resulting in the distribution of repayments to both accounts totaling P165.224 million;

• AtemporarysubsidiaryledgeraccountofP3.018billionandanegativebalanceofP5.194billionfrom88banks,somealreadyclosedormergedwithother banks, representing collections already remitted to SSS but not yet posted to members’ accounts;

• DiscrepancyofP528.479millionbetweenthebalancesoftheCCO–MainOfficeaccountandtheCashbookandtheReportofUndepositedCollectionsdue to prior and current years’ collections not matched with deposits, delayed validation of OFW collections, and deposit not closed to clearing account; and

• UnaccountedMigrationCash inBank (MIG-CIB)affecting theCIB-Euro/Dollar/PesoSavings/CurrentAccount in theamountofnegativeP626.41millionandtheCIB–WorkingFundaccountofP643.834million.

Opinion

In our opinion, except for the effects of the matter described in the Bases for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of the Social Security System as at December 31, 2010, and its financial performance and its cash flows for the year then ended in accordance with Philippine Financial Reporting Standards.

COMMISSION ON AUDIT

DELIA D. AGATEPState Auditor VSupervising Auditor

August 26, 2011

S t a t e m e n t o f M a n a g e m e n t ’s R e s p o n s i b i l i t y f o r

the Financial StatementsS t a t e Au d i t o r ’s R e p o r t o n

the Financial Statements

SOCIAL SECURITY SYSTEM

fiNANCiAL sTATEMENTs2010

28 292 0 1 0 A N N U A L R E P O R T

Notes 2010 2009 Revenues Members’ contribution 79,272,860,300 72,350,893,036 Investment and other income 21 27,847,894,686 22,985,618,802 107,120,754,986 95,336,511,838 Expenditures Benefit Payments 22 Retirement 38,226,764,028 35,126,490,608 Death 27,648,690,657 25,962,639,582 Maternity 3,634,831,332 3,589,163,852 Disability 3,362,393,087 3,253,748,170 Funeral grant 2,488,203,147 2,377,398,534 Sickness 1,777,593,577 1,703,782,723 Medical services 35,565,635 36,651,721 Rehabilitation services 115,985 82,815 77,174,157,448 72,049,958,005 Operating Expenses Personal services 23 5,271,665,639 4,730,723,529 Maintenance and other operating expenses 24 1,842,745,190 2,343,867,852 7,114,410,829 7,074,591,381

84,288,568,277 79,124,549,386 Net Revenues 22,832,186,709 16,211,962,452

Other Comprehensive Income/(loss) Available-for-sale financial assets Reclassification adjustments (6,497,262,229) (3,869,835,841) Gainonfairvalueadjustment 7,555,937,265 27,199,674,473 Revaluation increase - land - 277,700,739 Settlement of claims for disallowed payments - (11,313,834) 1,058,675,036 23,596,225,537 Total Comprehensive Income for the Year 23,890,861,745 39,808,187,989 See accompanying notes to financial statements.

S t a t e m e n t o f

Financial PositiondECEMBER 31, 2010(in Philippine Peso)

fOR ThE YEAR ENdEd dECEMBER 31, 2010(in Philippine Peso)

S t a t e m e n t o f

Comprehensive Income

Notes 2010 2009

ASSETS Current Assets Cash and cash equivalents 3 7,378,656,013 8,995,402,491 Held-to-maturity investments 4 7,397,607,090 13,293,628,605 Held-for-trading financial assets 5 3,330,769,671 979,839,420 Receivables 6 6,999,366,607 5,334,882,298 Other current assets 7 88,945,464 117,762,834 25,195,344,845 28,721,515,648 Non-Current Assets Non-current Financial assets 8 250,408,102,813 223,472,303,766 Investment property 9 12,129,126,734 10,895,675,521 Property and equipment 10 3,318,749,960 3,413,685,287 Intangible assets 11 208,582,776 164,934,237 Non-current assets held for sale 12 5,771,908,785 5,404,768,660 Other non-current assets 13 559,524,623 537,767,300 272,395,995,691 243,889,134,771 Total Assets 297,591,340,536 272,610,650,419 LIABILITIES Current Liabilities Accounts payable and accrued expenses 14 3,238,381,868 3,248,103,762 Funds held in trust 15 778,135,832 623,290,176 Deferred income 16 83,210,203 93,384,621 Other current liabilities 17 3,002,051,161 1,947,038,162 7,101,779,064 5,911,816,721 Non Current Liabilities Accrued retirement benefits 18 1,384,768,341 1,359,174,889 Rent payable 19 9,759,875 9,840,971 1,394,528,216 1,369,015,860 Total Liabilities 8,496,307,280 7,280,832,581 RESERVES 20 289,095,033,256 265,329,817,838 TOTAL LIABILITIES AND RESERVES 297,591,340,536 272,610,650,419

See accompanying notes to financial statements.

fiNANCiAL sTATEMENTs 2010

30 312 0 1 0 A N N U A L R E P O R T

Notes 2010 2009 Cash flows from operating activities Members’ contribution 79,272,860,300 72,350,893,036 Investment and other income 21 16,099,119,714 14,689,520,657 Payments to members and beneficiaries (77,278,979,616) (72,061,527,723)Payments for operations (7,154,956,505) (6,531,397,668) Operating income before changes in operating assets and liabilities 10,938,043,893 8,447,488,302 (Increase)/decreaseinoperatingassets Held-for-trading financial assets (835,334,809) 717,013,283 Receivables 6 (991,909,512) 992,815,389 Other operating assets (458,135,984) (26,484,820) Increase/(decrease)inoperatingliabilities Funds held in trust 154,845,656 101,026,873 Other current liabilities 1,055,012,999 (568,583,093) Net cash generated from operating activities 9,862,522,243 9,663,275,934 Cash flows from investing activities Loan releases and other investment purchases, net (11,147,603,134) (7,018,112,473)Acquisition of property and equipment, net 10 (158,721,227) (408,964,165)Acquisition of intangible assets, net 11 (47,298,033) (33,592,244) Net cash used in investing activities (11,353,622,394) (7,460,668,882) Cash flows from financing activities Corporate operating budget of Employees’ Compensation Commission and Occupational Safety and Health Center (125,646,327) (81,315,097) Net increase/(decrease) in cash and cash equivalents (1,616,746,478) 2,121,291,955 Cash and cash equivalents at beginning of year 3 8,995,402,491 6,874,110,536 Cash and cash equivalents at end of year 3 7,378,656,013 8,995,402,491

See accompanying notes to financial statements.

S t a t e m e n t o f

Cash FlowsS t a t e m e n t o f

Changes in ReservesfOR ThE YEAR ENdEd dECEMBER 31, 2010

(in Philippine peso)fOR ThE YEAR ENdEd dECEMBER 31, 2010

(in Philippine peso)

Gain/(loss) on fair

value adjustment Property

of available for-sale valuation Contingent Donated

Notes Reserve fund financial assets reserve surplus property Total reserves

Balance, 1 January 2010 237,458,434,323 26,347,427,214 1,505,523,674 7,040,647 11,391,980 265,329,817,838

Corporate operating budget of

Employees’ Compensation

Commission and Occupational

Safety and Health Center (125,646,327) - - - - (125,646,327)

Total comprehensive income

for the year 22,832,186,709 1,058,675,036 - - - 23,890,861,745

BALANCE, 31 DECEMBER 2010 20 260,164,974,705 27,406,102,250 1,505,523,674 7,040,647 11,391,980 289,095,033,256

BALANCE, 31 DECEMBER 2009 20 237,458,434,323 26,347,427,214 1,505,523,674 7,040,647 11,391,980 265,329,817,838

See accompanying notes to financial statements.

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1. REPORTING ENTITY

The Social Security System (SSS) administers social security protection to workers in the private sector. Social security provides replacement income for workers in times of death, disability, sickness, maternity and old age. On 1 September 1957, the Social Security Act of 1954 was implemented. Thereafter, the coverage and benefits given by SSS have been expanded and enhanced through the enactment of various laws. On 1 May 1997, Republic Act (RA) No. 8282, otherwise known as the “Social Security Act of 1997”, was enacted to further strengthen the SSS.UnderthisAct,thegovernmentacceptsgeneralresponsibilityforthe solvency of the SSS and guarantees that prescribed benefits shall not be diminished. Section 16 of RA 8282 exempts the SSS and all its benefit payments from all kinds of taxes, fees or charges, customs or import duty.

The SSS is a financial institution in the Philippines. Its principal office is in East Avenue, Quezon City.

The financial statements include the accounts of Employees’ Compensation and State Insurance Fund, which is being administered by the SSS, as provided for by Presidential Decree No. 626, as amended. All inter-fund accounts have been eliminated.

The accompanying financial statements were approved and authorized for issue by the Social Security Commission on 25 May 2011 under its Resolution No. 591-s.2011.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been used in the preparation of these financial statements are summarized below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

a. Statement of compliance

The financial statements of the SSS have been prepared in accordance with Philippine Financial Reporting Standards (PFRS), Philippine Accounting Standards (PAS) and Philippine Interpretations issued by the Financial Reporting Standards Council (FRSC), where applicable

b. Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items:

• financial assets at fair value through profit or loss are measured at fair value

• marketable securities classified as available-for-sale are measured at fair value

• investmentpropertiesaremeasuredatfairvalue • land under property and equipment are measured at

revalued amount

c. Estimates and judgments

The preparation of the financial statements in confirmity with PFRS/PASrequiresmanagementtomakejudgements,estimatesand assumptions that affect the application of accounting

policies and the reported amounts of assets, liabilities, revenue and expenses. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the affected asset or liability in the future

Judgments, estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

2.2 New standards, interpretations and amendments to published standards

a. Effective in 2010 that are relevant to SSS

a.1 2009 Annual Improvements to PFRS

The Financial Reporting Standards Council (FRSC) has adopted the Improvements to PFRS 2009. Among those improvements, only the following amendments were identified to be relevant but not expected to have material effects on the financial statements:

a.1.1 PAS 7 (Amendment), Statement of Cash Flows (effective from 1 January 2010)

The amendment clarifies that only an expenditure that results in a recognized asset can be classified as a cash flow from investing activities. Presently, the SSS classified only recognized assets as cash flow from investing activities.

a.1.2 PAS 17 (Amendment), Leases (effective 1 January 2010)

The amendment clarifies that when a lease includes both land and building elements, an entity assesses the classification of each element as finance or operating lease separately in accordance with the general guidance on lease classification set out in PAS 17.

b. Effective subsequent to 2010 that are relevant to SSS but not adopted early

b.1 PFRS 9 Financial Instruments

Issued in November 2009 and amended in October 2010, PFRS 9 introduces new requirements for the classification and measurement of financial assets and financial liabilities and for derecognition.

PFRS 9 requires all recognized financial assets that are within the scope of PAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows and that have contractual cash flows from solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

Equity instruments that are held for trading will be measured at fair value through profit or loss. For all other equity investments, an irrevocable election can be made at initial recognition, to recognize unrealized and realized fair value gains and losses through other comprehensive income rather than profit or loss. There shall be no recycling of fair value gains and losses to profit or loss. This election may be made on an instrument-by-instrument basis. Dividends are to be presented in profit or loss as long as they represent a return on investment.

While adoption of PFRS 9 is mandatory from 1 January 2013, earlier application is permitted. The SSS is currently assessing the implications and impact of PFRS 9 and it is not practicable to provide reasonable estimate of the effect until a detailed review has been completed.

2.3 Financial assets

a. Date of recognition

The SSS initially recognizes loans and receivables and deposits on the date that they are originated. All other financial assets are recognized initially on the trade date at which the SSS becomes a party to the contractual provisions of the instrument.

b. Initial recognition

The SSS initially recognizes a financial asset at fair value. Transaction costs are included in the initial measurement, except for financial assets measured at fair value through profit or loss.

c. Determination of fair value

The fair value of investments that are actively traded in organized financial markets is determined by reference to quoted market bid prices. When current bid prices are not available, the price of the most recent transaction provides evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction.

For investments where there is no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s-length market transactions, reference to the current market value of another instrument, which is substantially the same, discounted cash flow analysis and option pricing models.

d. Classification

The SSS has the following non-derivative financial assets: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.

d.1 Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss consist of held-for-trading financial assets. Held-for-trading financial assets are financial assets acquired

or held for the purpose of selling in the short term or for which there is a recent pattern of short-term profit taking.

Uponinitialrecognition,attributabletransactioncosts

are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein are recognized in profit or loss.

d.2 Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity for which there is the positive intention and ability to hold to maturity. They are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition held-to-maturity investments are measured at amortized cost using the effective interest method, less any impairment in value.

Gainsandlossesarerecognizedinprofitorlosswhenthe held-to-maturity financial assets are derecognized or impaired, as well as through the amortization process.

d.3 Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at cost or amortized cost less impairment in value.

A loan or receivable is deemed impaired when it is considered that it will probably not be possible to recover all the amounts due according to the contractual terms, or equivalent value. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default or delinquency in payments are considered indicators that such loans and receivables are impaired.

The SSS provides an allowance for impairment loss for 5 years and above delinquent member loan accounts. It adopts the Bangko Sentral ng Pilipinas (BSP) Circulars 210 Series of 1999 and 313 Series of 2001 in identifying and monitoring problem loans and risk assets and setting up of allowance for probable losses. BSP outlines the following rates for the setting up of allowance for probable losses:

Classification Allowances Unclassified 0% Loansespeciallymentioned 5% Substandard Secured 10% Unsecured 25% Doubtful 50% Loss 100%

N o t e s t o

Financial Statements(All amounts in Philippine peso unless otherwise stated)

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Member loan accounts that are subjected to impairment fall under substandard which is defined as loans or portions thereof which appear to involve a substantial and unreasonable degree of risk to the institution because of unfavorable record or unsatisfactorycharacteristics.Theyaresecured/backedby members’ equity and benefits (i.e. all outstanding obligations of members at the time of their application for final claim are being deducted from their claim proceeds).

d.4 Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the other categories. Subsequent to initial recognition, available-for-sale financial assets are carried at fair value in the statement of financial position. Changes in the fair value of such assets are recognized in other comprehensive income and presented within reserves in the unrealized gain or loss on available-for-sale financial assets portion. When an available-for-sale financial asset is derecognized, the cumulative gains or losses are transferred to profit or loss and presented as a reclassification adjustment within the statement of comprehensive income. Dividends on available-for-sale equity instruments are recognized in profit or loss when the right to receive payments is established.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortization) and its current fair value, less any impairment loss previously recognized in profit or loss, is transferred from reserves to profit or loss and presented as a reclassification adjustment within the statement of comprehensive income. Reversals in respect of equity instruments classified as available-for-sale are not recognized in profit or loss.

e. Derecognition of financial assets

Financial assets are derecognized when the rights to receive cash flows from the asset have expired or have been transferred and the SSS either has transferred substantially all risks and rewards of ownership or has neither transferred nor retained substantially all the risks and rewards of ownership, but has transferred control of the asset.

2.4 Cash equivalents

Cash equivalents comprise short-term, highly liquid investments that are readily convertible to known amounts of cash with original maturities of 90 days or less and are subject to an insignificant risk of change in value.

2.5 Supplies and materials

Supplies and materials are valued at cost using the weighted average method.

2.6 Investment property

Investment property account consists of property held to earn rentalsand/orforcapitalappreciation.

An investment property is initially measured at cost, including transaction costs. Such cost should not include start-up costs, abnormal waste, or initial operating losses incurred before the investment property achieves the planned level of occupancy. After initial recognition, it is measured at fair value with any change therein recognized in profit or loss.

Transfers to or from investment property are made when there is achange in use, evidenced by: • commencementofowner-occupation• endofowner-occupation• commencementofanoperatingleasetoanotherparty

2.7 Property and equipment

Property and equipment, except land, are stated at cost less accumulated depreciation, amortization and any impairment in value. Land is carried at revalued amount. Increase in value as a result of revaluation is credited to reserves under property valuation reserve unless it represents the reversal of a revaluation decrease of the same asset previously recognized as an expense, in which case it is recognized as income. On the other hand, a decrease arising as a result of a revaluation is recognized as an expense to the extent that it exceeds any amount previously credited to property valuation reserve relating to the same asset.

Cost includes all costs necessary to bring the asset to working condition for its intended use. This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site.

The cost of replacing a part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the SSS, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property and equipment are recognized in profit or loss as incurred.

Depreciation is calculated over the depreciable amount less its residual value. It is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment.

The estimated useful lives of property and equipment are as follows:

Assets Life Building /buildingimprovements 10-30 years Furniture and equipment /computerhardware 5-10 years Land improvements 10 years Transportation equipment 7 years Leasehold improvements 10-30 years (or the term

of lease whichever is shorter)

Building and building improvements have residual value equivalent to 10% of the acquisition/appraised value whileother items of property and equipment except land have one peso as their residual value.

Construction in progress (CIP) represents building and building/leasehold improvementsunder constructionand isstated at cost. CIP is not depreciated until such time as the relevant assets are completed and put into operational use.

2.8 Intangible assets

Acquired computer software/licenses are capitalized on thebasis of the costs incurred to acquire and bring to use the specificsoftware.Computersoftware/licenseswithfinitelivesare amortized on a straight-line basis over their estimated useful lives, while those with indefinite useful lives or those used perpetually or for as long as there are computers compatible with them are carried at cost and tested annually for impairment.

2.9 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met when the sale is highly probable and the asset is available for immediate sale in its present condition.

Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Any excess of carrying amount over fair value less costs to sell is an impairment loss. No depreciation is recognized for these assets while classified as held for sale.

Non-current assets held for sale include real and other properties acquired (ROPA) in settlement of contribution and member/housing/other loan delinquencies throughforeclosure or dation in payment. They are initially booked at thecarryingamountofthecontribution/loandelinquencyplustransaction costs incurred upon acquisition. When the booked amount of ROPA exceeds the appraised value of the acquired property, an allowance for impairment loss equivalent to the excess of the amount booked over the appraised value is set up.

2.10 Impairment of non-financial assets

The carrying amount of non-financial assets, other than investment property and non-current assets held for sale is assessed to determine whether there is any indication of impairment or an impairment previously recognized may no longer exist or may have decreased. If any such indication exists, then the asset’s recoverable amount is estimated. Recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

Impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. The carrying amount of the asset is reduced through the use of an allowance account and the amount of loss is recognized in profit or loss unless it relates to a revalued asset where the valuechangesarerecognizedinothercomprehensiveincome/loss and presented within reserves in the property valuation reserve portion. Depreciation and amortization charge for future periods is adjusted.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized in prior years.

2.11 Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the SSS and the amount of revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

a. Member’s contribution

Revenue is recognized upon collection.

b. Interest income

Revenue is recognized as the interest accrues, taking into account the effective yield on the asset.

c. Dividend income

Dividend income is recognized at the time the right to receive the payment is established.

d. Rental income

Rental income is recognized on a straight-line basis over the lease term.

2.12 Expense recognition

Expenses are recognized in the statement of comprehensive income upon utilization of the service or at the date they are incurred.

2.13 Operating Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

a. SSS as lessee

Leases which do not transfer to the SSS substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as expense on a straight-line basis over the lease term.

b. SSS as lessor

Leases where the SSS does not transfer to the lessee substantially all the risk and benefits of ownership of the asset are classified as operating leases. Lease income from operating leases is recognized as income on a straight-line basis over the lease term.

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3. CASH AND CASH EQUIVALENTS

2010 2009 Cash on hand and in banks 1,599,637,243 3,313,776,021 Time and special savings deposits 5,779,018,770 5,681,626,470 7,378,656,013 8,995,402,491

Cash in banks earn interest at the respective bank deposit rates. Time and special savings deposits are made for varying periods of up to 90 days depending on the immediate cash requirements of SSS and earn interest at the prevailing time and special savings deposit rates.

In consideration of the banks’ making their deposit pick up facility available to the SSS, the latter agreed to maintain an average daily balance of P1 million in a non-drawing interest bearing current account/savings account (CASA) with each of the banks’ servicingbranches. As of 31 December 2010, P94 million is being maintained in several banks for such purpose.

4. HELD-TO-MATURITY INVESTMENTS

2010 2009 Short-term money placements 6,174,075,669 11,270,800,000 Treasury bills 1,223,531,421 2,022,828,605 7,397,607,090 13,293,628,605 Short-term money placements are short-term investments with

original maturities of more than 90 days.

5. HELD-FOR-TRADING FINANCIAL ASSETS

The cost of held-for-trading financial assets as at 31 December 2010 and 2009 are P1,872.51 million and P1,037.17 million, respectively.

6. RECEIVABLES 2010 2009 Collectingbanks/agents/ bayad center 3,483,825,943 2,435,277,439 Interest receivable 2,564,234,272 2,218,145,921 Other receivables 951,306,392 681,458,938 6,999,366,607 5,334,882,298

7. OTHER CURRENT ASSETS 2010 2009 Supplies and materials inventory 77,551,114 107,185,948 Prepaid expenses 5,975,871 5,563,231 Advances-officials and employees 4,396,305 3,937,188 Revolving fund 1,022,174 1,076,467 88,945,464 117,762,834

8. NON-CURRENT FINANCIAL ASSETS 2010 2009 Available-for-sale financial assets 77,414,883,712 69,294,782,362 Held-to-maturity investments Notes and bonds 105,676,840,914 82,289,672,152 Accumulated impairment loss (809,701,706) (884,701,706) 104,867,139,208 81,404,970,446 Loans and receivables Member loans 43,292,288,927 44,407,118,536 Loan to National Home Mortgage Finance Corporation 14,003,355,778 14,990,587,912 Sales contract receivable 5,262,750,215 5,224,529,406 Housing loans 4,620,116,641 4,661,268,782 Loan to Home Development Mutual Fund 2,739,484,368 3,316,217,919 Commercial and industrial loans 681,392,501 888,778,261 Loan to other government agencies 110,086,039 122,198,032 Program MADE 17,219,220 17,219,220 70,726,693,689 73,627,918,068 Accumulated impairment loss (2,600,613,796) (855,367,110) 68,126,079,893 72,772,550,958 250,408,102,813 223,472,303,766

The carrying amount of available-for-sale financial assets is as follows:

2010 2009 Marketable securities Cost 49,523,683,085 42,462,256,771 Unrealizedgain 27,406,102,250 26,347,427,214 76,929,785,335 68,809,683,985 Ordinary and preference shares Cost 1,208,710,857 1,208,710,857 Accumulated impairment loss (723,612,480) (723,612,480) 485,098,377 485,098,377 77,414,883,712 69,294,782,362

The current portion of held-to-maturity government notes and bonds as at 31 December 2010 and 2009 are P3.61 billion and P8.20 billion, respectively.

Using the BSP guidelines in identifying and monitoring problemloans and risk assets and setting up of allowance for probable losses, impairment provision amounting to P1.75 billion was recognized in 2010 for 5 years and above delinquent member loan accounts.

9. INVESTMENT PROPERTY

Land Building development cost TotalFair value, 01 January 2010 8,109,319,990 2,776,758,858 9,596,673 10,895,675,521 Additions - 38,588,498 89,165 38,677,663 Cancellation of contract - 6,155,510 - 6,155,510 Disposals (140,000,000) (44,076,780) - (184,076,780)Fair value gain 927,585,210 445,109,610 - 1,372,694,820 Fair value, 31 December 2010 8,896,905,200 3,222,535,696 9,685,838 12,129,126,734 Fair value, 31 December 2009 8,109,319,990 2,776,758,858 9,596,673 10,895,675,521

The costs of investment property as at 31 December 2010 and 2009 stood at P7.58 billion and P7.73 billion, respectively.

The fair value of investment property is determined based on valuations performed by independent appraisers.

The following amounts are recognized in the statement of comprehensive income:

2010 2009Gainonfairvalueadjustment 1,372,694,820 186,376,519Rental income 458,511,931 394,624,497 Gainonsale/disposal 63,132,286 5,438,485Penalty on rentals 2,170,411 1,556,391 Direct operating expenses (70,943,396) (89,686,173) 1,825,566,052 498,309,719

10. PROPERTY AND EQUIPMENT

furniture and equipment, transportation equipment, Land, Buildings and computer land/building/leasehold hardware and Construction improvements others in progress Total

Grosscarryingamount 01 January 2010 3,313,599,142 3,735,413,828 22,840,059 7,071,853,029Additions - 140,109,224 26,997,205 167,106,429Transfers 3,668,690 - (3,499,916) 168,774Retirement/disposals/cancellation (197,251) (347,254,759) - (347,452,010)31 December 2010 3,317,070,581 3,528,268,293 46,337,348 6,891,676,222Accumulateddepreciation/amortization 01 January 2010 618,739,978 2,982,704,014 - 3,601,443,992Charge for the period 50,086,759 206,145,469 - 256,232,228Retirement/disposals/cancellation - (341,473,708) - (341,473,708)31 December 2010 668,826,737 2,847,375,775 - 3,516,202,512Accumulated impairment loss 01 January 2010 56,723,750 - 56,723,75031 December 2010 56,723,750 - 56,723,750Net book value, 31 December 2010 2,591,520,094 680,892,518 46,337,348 3,318,749,960Net book value, 31 December 2009 2,638,135,414 752,709,814 22,840,059 3,413,685,287

Land, buildings and building improvements were last revalued in December 2009 by independent valuers. Valuations were made on the basis of market value.

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If land, buildings and building improvements were stated on the historical cost basis, the carrying amount would be as follows:

2010 2009Cost 1,694,194,129 1,694,222,606 Accumulated depreciation (548,450,914) (508,769,669) 1,145,743,215 1,185,452,937

Lease rentals amounting to P12.63 million and P13.09 million for the year ended 31 December 2010 and 2009, respectively were included in the statement of comprehensive income.

11. INTANGIBLE ASSETS

Licenses software TotalCost 01 January 2010 291,020,968 138,757,006 429,777,974 Additions 4,239,649 81,672,847 85,912,496 Retirement/disposals/cancellation (80,596,996) - (80,596,996)31 December 2010 214,663,621 220,429,853 435,093,474 Accumulated amortization 01 January 2010 29,303,384 39,398,930 68,702,314 Amortization charge for the period 22,988,142 13,572,715 36,560,857 31 December 2010 52,291,526 52,971,645 105,263,171 Accumulated impairment loss 01 January 2010 151,195,023 44,946,400 196,141,423 Retirement/disposals/cancellation (74,893,896) - (74,893,896)31 December 2010 76,301,127 44,946,400 121,247,527 Net book value, 31 December 2010 86,070,968 122,511,808 208,582,776 Net book value, 31 December 2009 110,522,561 54,411,676 164,934,237

The carrying amount of intangible assets with indefinite lives as at 31 December 2010 amounted to P36.66 million.

12. NON-CURRENT ASSETS HELD FOR SALE

Acquired assets/ Land Building registered TotalCarrying amount, 01 January 2010 4,911,924,579 162,287,607 353,478,285 5,427,690,471 Accumulated impairment loss (5,356,794) (15,173,429) (2,391,588) (22,921,811)Net carrying amount, 01 January 2010 4,906,567,785 147,114,178 351,086,697 5,404,768,660 Additional/adjustments 381,513,420 - 53,384,496 434,897,916Disposals (9,159,558) (3,384,986) (55,115,840) (67,660,384)Impairment(loss)/recovery 174,482 (271,889) (97,407)Carrying amount, 31 December 2010 5,279,096,129 143,729,192 349,083,464 5,771,908,785 Carrying amount, 31 December 2009 4,906,567,785 147,114,178 351,086,697 5,404,768,660

13. OTHER NON-CURRENT ASSETS 2010 2009 Interest receivable 12,708,798,008 12,744,155,258 Accumulated impairment loss (12,707,637,955) (12,740,230,932) 1,160,053 3,924,326 Advances-fire/MRI/ foreclosure proceedings 165,588,834 179,145,923 Accumulated impairment loss (953,811) (953,811) 164,635,023 178,192,112 Others 909,879,048 871,800,363 Accumulated impairment loss (516,149,501) (516,149,501) 393,729,547 355,650,862 559,524,623 537,767,300

Non-current interest receivable includes those originated from Home GuarantyCorporation(HGC)guaranteedcorporatenotesandloantoNational Home Mortgage Finance Corporation (NHMFC) amounting to P120.44 million and P12.58 billion, respectively.

The Department of Finance is still evaluating HGC’s request toissue bonds to settle its guaranty obligations with the SSS. HGCalso offered, subject to SSS evaluation, to settle all outstanding guaranteed obligations through assignment and conveyance of its acquired assets in various locations.

The non-current interest receivable from loan to NHMFC represents portion of the total restructured loan amount that SSS and NHMFC have allocated to unpaid interest and penalty as of cut-off date, 31 March 2002, payment of which shall be sourced from the residuals of the cash flows of the remaining accounts upon full payment of low, moderate and high delinquency outstanding obligations.

14. ACCOUNTS PAYABLE AND ACCRUED EXPENSES 2010 2009 Accounts payable 2,135,812,426 1,986,268,116 Accrued expenses 1,102,569,442 1,261,835,646 3,238,381,868 3,248,103,762

15. FUNDS HELD IN TRUST

This account includes among others bidders’ deposits, withholding taxes and retention withheld from suppliers and creditors to answer fordefectivedeliveriesorservices,contributionstoGSIS,PHIC,HDMFand SSS Provident Fund and equity of Flexi-fund members.

Breakdown as follows:

2010 2009 Flexi-fund 269,057,470 228,026,818 Officials and employees 130,020,909 131,980,533 Borrowers and other payors 120,522,057 113,877,011 Unifiedmulti-purposeIDfund 99,392,076 - Due to other government units 94,043,739 86,757,756 Supplies and creditors 48,020,831 35,643,494 Dividend - stock investment loan program 15,501,904 15,501,904 Educational loan fund - DECS 1,576,846 1,497,104 Legal education fund - 10,005,556 778,135,832 623,290,176

The Flexi-fund represents equities of members under the voluntary supplementary benefits program of the SSS for Overseas Filipino Workers and authorized under Section 4.a.2 of the RA 8282. The Social Security Commission (SSC), in its Resolution No. 288 dated 18 April 2001, approved the establishment of this supplementary benefits program.

The Legal Education Fund (LEF) is a special endowment fund under the control of the Legal Education Board (LEB), which was created under RA 7662. It is being administered by the SSS, which invests the same with due and prudent regard to its solvency, safety and liquidity.

On 8 March 2010, the SSS returned the P10 million fund to the Commission on Higher Education (CHEd) through its Chairman Emmanuel Y. Angeles. The return of the fund was agreed upon during the 3 February 2010 meeting of the SSS Investments Group withsome members of the LEB led by its Chairman and the representatives of CHEd. In the said meeting, they agreed that the SSS has no legal authority to hold the fund since it represents the remaining funds in the books of CHEd for purposes of LEB’s operational requirements and does not form part of the LEF.

The Unified Multi-purpose ID (UMID) fund represents amountprovided by the National Statistics Office (NSO), which will be used to pay all direct and indirect costs of the central verification and enrollment system for theUMIDaswell asall costsnecessaryandincidental thereto, including all expenses to be incurred related to the formulation, drafting recommendation and approval of the project implementation and information campaign plans.

16. DEFERRED INCOME

This account represents advance rental payments from tenants of SSS property.

17. OTHER CURRENT LIABILITIES

This account includes among others collections credited to the accounts pending receipt of collecting agencies’ documents and actual distribution of collections and payments whose nature are not indicated by payors.

Breakdown as follows: 2010 2009 Member loan (ML) collection 1,380,694,777 898,748,166 Real estate loan collection 534,281,784 270,324,207 Undistributedcollection 428,831,056 377,824,043 ML collection deducted from benefits payments 330,410,838 41,705,930 OFW collections 265,672,623 273,012,229 Sales contract receivable 61,091,057 81,741,630 Rental receivable 855,145 2,809,290 Employees’ housing loan program 117,227 31,163 Express padala 96,654 841,504 3,002,051,161 1,947,038,162

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In its Resolution No. 402 s. 2007, the SSC, adopted the use of acquisition cost of shares of stock as the basis for computing the 30%limit inequityinvestments,basedontheopiniondated25June 2007 of the Legal and Adjudication Sector of COA.

20.2 Actuarial valuation of the reserve fund of the SSS

The Social Security Act of 1997 requires the Actuary of the System to submit a valuation report every four (4) years, or more frequently as may be necessary, to determine the actuarial soundness of the reserve fund of the SSS and to recommend measures on how to improve its viability.

The reserve fund is affected by (a) changes in demographic factors (such as increased life expectancy, ageing of population, declining fertility level and delay in retirement) and (b) the economic conditions of the country. Taking into account the uncertainty of future events, economic assumptions on interest rates, inflation rates and salary wage increases, among others, are projected.

In the 1999 Actuarial Valuation, the Social Security Fund (SSF) was projected to last until 2015. Since then, parametric measures (e.g.increasesinthecontributionratefrom8.4%to9.4%inMarch2003 and to 10.4% in January 2007, increase in themaximumsalary base for contributions from P12,000 to P15,000, and the redefinition of Credited Years of Service (CYS) and operational developments (e.g. Tellering System, more accounts officers, cost saving measures, improved investment portfolio and management, etc.) were implemented to strengthen the SSF.

The System’s concerted efforts have resulted in improved actuarial soundness. Results of the 2003 Actuarial Valuation indicate an extension on the life of the fund by sixteen years, from 2015 to 2031.

Theincreaseincontributionrateto10.4%,effectiveJanuary2007,has extended further the SSF life to 2036, taking already into accountthegrantof10%across-the-boardincreasesinpensioneffective September 2006 and September 2007.

The following table presents the results of the 2007 Actuarial Valuation, compared to the previous 2003 Valuation results. There are two columns under the 2003 Valuation: (1) the original results as published in the 2003 Actuarial Valuation Report; and (2) the updated results that take into consideration the across-the-board pension increases in 2006 and 2007 and the contribution rate increase at the start of 2007.

Actuarial ValuationComparison of Key Projection Results2007 Valuation versus 2003 Valuation

Under the Baseline scenario

Key Projection Results 2003 Valuation 2007 Valuation Original * Updated ** No Across-the- Year Fund Will Last 2031 2036 2039Board Increase Year Net Revenue

2022 2026 2030in Pensions Becomes Negative * As published in the 2003 Actuarial Valuation Report**Updatedresultsaftertheincreaseincontributionrateto10.4%in January2007andthe10%across-the-boardpensionincreasesin 2006 and 2007

18. ACCRUED RETIREMENT BENEFITS

18.1 Retirement benefits

Retirement benefits are available to qualified employees under any one of RA 1616, RA 660 and RA 8291.

18.2 Terminal leave benefits

This represents the cash value of the accumulated vacation and sickleavecreditsofemployees,50%ofwhichcanbemonetizedonce a year and the balance payable upon resignation/retirement.

18.3 Retirement incentive award

Employees with at least 20 years of creditable service are entitled to P2,000 for every year of service upon retirement.

The accrued retirement benefits of employees at 31 December 2010 and 2009 are as follows:

2010 2009

Retirementbenefits/gratuity 673,544,852 677,779,595 Terminal leave pay 621,563,865 593,323,045 Retirement incentive award 89,659,624 88,072,249 1,384,768,341 1,359,174,889

19. RENT PAYABLE

This account represents future rent payments for lease contracts entered by the SSS for its various branches.

20. RESERVES

20.1 Investment reserve fund (IRF)

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 of the reserve fund as are not needed to meet the current benefit obligations is known as the IRF which the SSC manages and invests with the skill, care, prudence and diligence necessary under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would exercise in the conduct of an enterprise of a like character and with similar aims, subject to prescribed ceilings under Section 26 of the SS Law (the Act).

No portion of the IRF or income thereof shall accrue to the general fund of the National Government or to any of its agencies orinstrumentalities, including government-owned or controlled corporations, except as may be allowed under the SS Law Act. The Act also provides that no portion of the IRF shall be invested for any purpose or in any instrument, institution or industry over and above the prescribed cumulative ceilings as follows: 40%inprivate securities, 35% inhousing, 30% in real estate relatedinvestments,10%inshortandmedium-termmemberloans,30%in government financial institutions and corporations, 30% ininfrastructureprojects,15%inanyparticularindustryand7.5%inforeign-currency denominated investments.

21. INVESTMENT AND OTHER INCOME 2010 2009 Investment income Income from current investments Held-to-maturity investments Interest income 452,568,941 1,897,400,081 Held-for-trading financial assets Dividend income 25,923,712 19,836,699 Gainonfairvalueadjustment 1,515,595,442 356,796,375 Gainonsale/disposal 459,704,837 899,084,322 Investments expense (24,191,069) (57,424,537) 1,977,032,922 1,218,292,859 2,429,601,863 3,115,692,940 Income from non-current investments Available-for-sale financial assets Dividend income 3,414,379,491 2,916,145,314 Gainonsale/disposal 10,066,595,622 6,231,014,237 Investment expense (1,473,850) - Impairment loss - (24,217,590) 13,479,501,263 9,122,941,961 Held-to-maturity investments Interest income 7,634,139,077 5,553,592,672 Penalty on overdue amortization 608 3,646 Gainonsale/disposal - 166 Investment expense (604,162) (566,323) 7,633,535,523 5,553,030,161 Loans and receivable Interest income 2,908,825,689 2,871,301,566 Penalty on overdue amortization 807,264,456 713,694,415 Investment expense (303,060) (602,887) Impairment loss (1,746,332,726) (4,081,582) 1,969,454,359 3,580,311,512 Investment property 1,825,566,052 498,309,719 27,337,659,060 21,870,286,293 Other income Interest income from cash in bank and cash equivalents 389,047,630 448,511,170 Director’s fee 23,359,055 11,885,142 Non-current assets held for sale Rental income 35,089,798 12,241,523 Gainonsale/disposal 86,756,509 117,796,135 Related expense (5,668,009) (3,858,714) Impairment loss (1,479,330) (17,150,920) Reversal of impairment loss/revaluationdecrease 108,710,662 377,533,793 Service fee - salary loan 111,066,521 134,739,300 Others-net (236,647,210) 33,635,080 510,235,626 1,115,332,509 Total investment and other income 27,847,894,686 22,985,618,802

22. BENEFIT PAYMENTS

This account represents payments to members and their beneficiaries in the event of disability, sickness, maternity, old age, death and other contingencies resulting in loss of income or financial burden.

23. PERSONAL SERVICES 2010 2009 Salaries and wages 2,207,761,858 2,042,390,245 Madatory contributions 1,178,847,346 985,359,489 Incentive award 749,088,274 743,792,358 Bonus and rice grant 506,303,033 465,204,453 Allowances 352,977,335 226,048,594 Other personal services 157,514,093 139,666,890

Terminal leave pay 119,173,700 128,261,500 5,271,665,639 4,730,723,529

Provident fund (part of mandatory contributions) is a defined contribution plan made by both the SSS and its officers and employees. The affairs and business of the fund are directed, managedandadministeredbyaBoardofTrustees.Uponretirement,death or resignation, the employee or his heirs will receive from the fund payments equivalent to his contributions, his proportionate share of the SSS’ contributions and investment earnings thereon. However, effective 28 January 2005, retired and separated members have the option to retain part or all of his total equity in the fund for a maximum period of five years.

24. MAINTENANCE AND OTHER OPERATING EXPENSES 2010 2009 Other operating expenses 338,871,378 415,053,615 Depreciation /amortizationexpense 292,793,085 223,998,558 Maintenance and repairs - building/leasedoffices 280,436,866 275,404,010 Light and water 178,527,241 143,671,599 Maintenance and repairs - furniture and equipment 164,366,293 227,988,659 Service bureau expenses 138,001,528 378,396,095 Office space rentals 128,000,180 124,087,159 Communication expenses 127,171,098 135,151,280 Supplies and materials 106,884,216 121,470,027 COA audit services 37,843,695 36,753,557 Maintenance and repairs - transportation equipment 24,935,126 22,845,061 Special Project 24,914,484 42,906,809 Impairment loss - operating assets - 196,141,423 1,842,745,190 2,343,867,852

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25. OPERATING LEASE COMMITMENTS

25.1 SSS as lessee

The SSS leases offices for its various branches under cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

25.2 SSS as lessor

The SSS leases out portion of its office space to various tenants under cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

26. FINANCIAL RISK MANAGEMENT

The SSC and SSS management are active in the evaluation, scrutiny and credit approval process on all investments being undertaken by the SSS. The SSC has adopted adequate policies on investment procedures, risk assessment and measurement and risk monitoring by strict observance on the statutory limit provided under the RA 8282 and compliance to the investment procedures. Internal controls are also in place and comprehensive audit is being done by Internal Audit Services.

The main risk arising from the SSS’ financial instruments are interest rate risk, credit risk, liquidity risk and market price risk. The SSC and SSS management review and agree on the policies for managing these risks as summarized below.

26.1 Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates.

The SSS strictly adheres to the provisions of Section 26 of the RA 8282 which states that the funds invested in various corporate notes/bonds, loan exposures and other financial instruments shallearn an annual income not less than the average rates of treasury bills or any acceptable market yield indicator. Currently, the SSS has achieved a mix of financial investments with interest rates that are within acceptable level. Significant investments in said instruments have fixed interest rates while repricing rates of investments in corporate notes/bonds that carry floating interest rates are alwaysbased on acceptable yield (i.e. prevailing 3 months Philippine Dealing SystemTransaction-FixingRateplusaspreadofnotlessthan0.50%).

26.2 Credit risk

Credit risk is the risk of suffering financial loss should any of the SSS’ counterparties fail to fulfill its contractual obligations to the SSS. This includes risk of non-payment by issuers and borrowers, failed settlement of transactions and default on outstanding contracts.

The SSS implements structured and standardized evaluation guidelines, credit ratings and approval processes. Investments undergotechnicalevaluationtodeterminetheirviability/acceptability.Due diligence process (i.e. credit analysis, evaluation of the financial performanceoftheissuer/borrowertodeterminefinancialcapabilityto pay obligations when due, etc.) and information from third party (e.g. CIBI Information, Inc., banks and other institutions) are used to determine if counterparties are credit-worthy.

With respect to stockbrokers, the SSS has adopted the following mitigating measures:

a. Minimum requirements for stockbroker evaluation

a.1 StockbrokerisaMemberofGoodStandingoftheExchangeasdefined under Rule 3(g) of the Securities Regulation Code.

a.2 The stockbroker shall have a minimum capitalization of fifteen million pesos.

a.3 The stockbroker shall be profitable for three of the last five years of operation. However, stockbrokers not able to meet the profitability requirement may be qualified provided that capitalization is at least thirty million pesos for those with losses.

a.4 The stockbroker shall have a positive track record of service to other institutional clients.

b. Stockbroker transactions, allocations and limits

b.1 Total daily transactions, excluding block transactions, per stockbrokershallnotexceed50%ofstockbrokercapitalization/stockholder’s equity, whichever is lower.

b.2 Total transactions, excluding negotiated block transactions, for each of the accredited stockbrokers, during the accreditation period,shallnotexceed15%oftotalSSStransactions.

b.3 Transactions, excluding negotiated block transactions, with the SSS by the stockbroker, within the year of accreditation, shall not exceed40%of its totalmarket transactions.This ensuresthat the stockbroker does not rely heavily on SSS for its business.

To avoid significant concentrations of exposures to specific industries or group of issuers and borrowers, SSS investments are regularly monitored so that in no time shall they exceed the prescribed cumulative ceilings specified in Section 26 of the RA 8282.

The following table shows the latest aging analysis of some financial assets:

2010 Past due but not impaired (Age in months) Neither past due nor impaired 3-12 13-36 37-48 49-60 Over 60 Expired impaired Total (In Millions)Held-for-trading financial assets 3,331 - - - - - - - 3,331

Available-for-sale financial assets 77,415 - - - - - - 723 78,138

Held-to-maturity investments Short-term money placements 6,174 - - - - - - - 6,174 Treasury bills 1,224 - - - - - - - 1,224 Corporate notes and bonds 12,349 - - - - - - 810 13,159 Governmentnotesandbonds 92,518 - - - - - - - 92,518

Loans and receivable National Home Mortgage Finance Corporation 13,867 - - - - 136 14,003 Home Development Mutual Fund 2,739 - - - - 2,739 Commercial and industrial loans 602 - - - 2 8 4 65 681 Program MADE 17 17 Other government agencies 110 - - - - - - - 110 Sales contract receivable Investment property 87 4 1 - - - - - 92 Non-current assets held for sale 285 140 117 30 17 35 11 - 635 Available-for-sale financial assets 4,535 - - - - - - - 4,535 Employee housing loan program 421 4 1 - - 2 - 2 430 215,657 148 119 30 19 45 15 1,753 217,786

2009 Restated Past due but not impaired (Age in months) Neither past due nor impaired 3-12 13-36 37-48 49-60 Over 60 Expired impaired Total (In Millions) Held-for-trading financial assets 980 - - - - - - - 980

Available-for-sale financial assets 69,295 - - - - - - 723 70,018

Held-to-maturity investments Short-term money placements 11,271 - - - - - - - 11,271 Treasury bills 2,023 - - - - - - - 2,023 Corporate notes and bonds 12,665 - - - - - - 885 13,550 Governmentnotesandbonds 68,740 - - - - - - - 68,740

Loans and receivable National Home Mortgage Finance Corporation 14,855 - - - - - - 136 14,991 Home Development Mutual Fund 3,316 - - - - - - - 3,316 Commercial and industrial loans 808 1 - 2 4 9 - 65 889 Program MADE - - - - - - - 17 17 Other government agencies 122 - - - - - - - 122 Sales contract receivable Investment property 84 4 1 - - - - - 89 Non-current assets held for sale 292 162 90 17 13 17 9 - 600 Available-for-sale financial assets 4,535 - - - - - - - 4,535 Employee housing loan program 345 1 - - - - - 7 353 189,331 168 91 19 17 26 9 1,833 191,494

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Internal Audit Service considers total member satisfaction as the most important gauge of the performance of SSS instead of

figures that signify improved collections and maximum investment yields. Determining client satisfaction, however, is not an easy

task as members have different standards in terms of service delivery. In this vein, we choose carefully each audit project by having

in mind the welfare of members and making sure that what we do redounds ultimately to their benefit.

Based on the completed and submitted audit reports for 2010, hereunder are the most significant observations:

1) Opening tellering SSS in branches is a clear strategy designed to afford members the convenience to pay their contributions

and loan amortizations. However, vital requirements should not be compromised for the sake of convenience. The security and

safety of the funds and personnel are paramount considerations in the decision to open a tellering branch. Hence, it requires a

standard layout with all the necessary facilities to prevent incidents resulting in the loss of funds. Clear policy guidelines and

comprehensive operating procedures are also a prerequisite.

2) The examination of the records of the National Home Mortgage and Finance Corporation (NHMFC) not only conforms with the

provisions of the Restructuring Agreement between SSS and NHMFC, but also runs parallel to the legal mandate of ensuring

prudent management of SSS investments. The SSS Lock box account was opened exclusively for the deposit of collections from the

UnifiedHomeLendingProgramandforthepaymentofmanagementfeesandnecessaryexpenses.Auditcoveredtransactions

in 2004 and 2005. The positive outcome of this project is that both management and NHMFC committed to institutionalize

mechanism for the periodic reconciliation of records.

3) The Accounts Monitoring System (AMS) is an automated system design to facilitate management of employers contributions

delinquency. However, the technology has yet to be fully utilized by the intended users due to perceived hitches. Audit has proven

that while there are some deficiencies in AMS most of the major functionalities are available and working. IAS is convinced that

the AMS is an effective tool in monitoring employer delinquency.

4) In 2011, IAS will channel its energy back to the basics. Convinced that the new management will not give any stone unturned as

far as improving corporate governance and operating systems are concerned, IAS will perform its role with even more enthusiasm.

After all, customer satisfaction is what drives IAS to perform beyond limits and play a crucial role in the attainment of corporate

goals.

ANTONETTE L. fERNANdEZ

Assistant Vice President

I n t e r n a l

Auditor’s Report26.3 Liquidity risk

Liquidity risk arises from the possibility that the SSS may encounter difficulties in raising funds to meet its payment obligations (i.e. payment of benefits, working capital requirements and planned capital expenditures) when they fall due. The SSS manages this risk through daily monitoring of cash flows in consideration of future payment due dates and daily collection amounts. The SSS also maintains sufficient portfolio of highly marketable assets that can easily be liquidated as protection against unforeseen interruption to cash flow.

26.4 Market price risk

The SSS’ market price risk arises from its investments carried at fair value (fair value through profit or loss and available-for-sale financial assets). It manages this risk by monitoring the changes in the market price of the investments.

27. OTHER MATTERS

27.1 Commitments

Amount authorized but not yet disbursed for capital expenditures as of 31 December 2010 is approximately P734.53 million.

27.2 UnifiedMulti-purposeID(UMID)

a. Central verification system

In line with Executive Order No. 700 dated 16 January 2008 which mandates the SSS President and CEO to take over the work of the National Economic Development Authority (NEDA) Director-GeneraltoimplementthestreamliningandharmonizationoftheIDsystemsofallGovernment-OwnedandControlledCorporations(GOCCs) towards a unified multi-purpose ID system, the SSSsigned aMemorandum of Understanding (MOU) with NationalStatistics Office (NSO) on 9 September 2009. In pursuance to the objectivesof theUMID, thepartiesshallbuild jointly, in favorofthe NSO, a central verification and enrollment system (CVES) for theUMID.All direct and indirect costs ofCVES shall be chargedagainst the funds provided by the NSO who in turn shall allocate a total amount of P650 million to fund the project. Implementation shallcommenceuponexecutionoftheMOUandshallenduponthe complete turnover of the system from the SSS to the NSO. Relative thereto, the SSS signed an Agreement with winning bidder A LAMCO-EUROLINK JOINTVENTURE (LAMCO) on 6May2010. The agreement covers the supply, delivery and installation of the central verification system (CVS) with a total contract price of P279.97 million to be delivered within 90 days from signing of the agreement.

An Advice of Complete Installation for SSS CVS Project was provided by LAMCO last 24 August 2010. This gave SSS thirty (30) calendar days within which to conduct Inspection and Acceptance Testing. As of December 2010, the testing of the project in accordance with the criteria described in the Agreement as well as the Acceptance Test based on mutually agreed test procedures and parameters were still on-going.

b. Card production

After an open and competitive bidding, the SSS signed an Agreement with the Joint Venture composed of the ALLCARD PLASTICS PHILIPPINES, INC., the STRADCOM CORPORATION and the TECO ELECTRIC AND MACHINERY CO., LTD on 14 December 2009. The agreement with a total contract price of P1.69 billion

covers/involvesthe(a)production,supplyanddeliveryofSSSUMIDcontactless smartcards and plastic card jackets (b) supply, delivery, installation, customization, operation and maintenance of a card managementsystem(CMS)andakeymanagementsystem(KMS)(c) supply, delivery and maintenance of two hundred ninety (290) contactlesssmartcardreaders/writers(d)set-upoftrainingfacilityand the conduct of personnel training and (e) all other items that can be reasonably inferred as being required for the completion of CMSandKMS.Set-upanddeliveryofvariousdeliverablesshallbemade within 90 days from signing of the agreement.

As of September 2010, 290 units contactless card readers were delivered and paid for in the amount of P2.32 million. However, the local card production facility that should have been set-up is still not compliant with the following requirements: (1) submission of permit to operate generator set and other mechanical equipment and (2) dedicated 24/7 data communication line between thefacility and SSS CMS.

c. Data capture

The SSS signed a Memorandum of Agreement (MOA) with Philippine Postal Corporation (PhilPost) on 12 May 2010 for the outsourcing of the data capture and enrollment component of the UMID project with an estimated cost of P1.26 billionthroughNegotiatedProcurement.Undertheagreement,PhilPostshall provide SSS with a biometric data services facility that will capture biometric or demographic data to be used by the SSS in the issuance of UMID-compliant ID cards to its members. Thisshall include SSS members and applicants whose biometric data have not yet been previously captured and/orwhose data needto be updated. PhilPost shall likewise deploy such data capture workstations, personnel and other resources so as to adequately service the enrollment capture/update needs of SSS ID cardsapplicants and holders. The MOA shall be effective for a period of 5 years unless extended in writing by mutual agreement of SSS and PhilPost.

As of December 2010, PhilPost has set-up for testing purposes a data capture workstation in Diliman Branch. This is to ensure that the output with respect to the fingerprint, signature and demographic data are compliant with the requirements, specifications, terms and conditions provided for in the Terms of Reference found in the Agreement.

27.3 Tax compliance

The amount of taxes withheld (net of adjustments) for the year 2010 amounted to as follows:

Income taxes withheld on compensation 583,621,430.68 Value added tax 83,664,319.54 Expanded withholding tax 60,978,852.88 728,264,603.10

Income taxes withheld on compensation and expanded withholding tax are remitted on or before the 15th day of the following month except those withheld for the month of December which should be remitted on or before the 20th day of January of the following year. On the other hand, value added taxes withheld are remitted on or before the 10th day of the following month. Of the total taxes withheld by SSS, P670,620,317.97 was remitted to the Bureau of Internal Revenue (BIR) in 2010, while the balance of P57,644,285.13 was remitted in 2011.

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fOR ThE YEAR* As Of dECEMBER 31 As Of dECEMBER 31YEAR W E W E P** W/P E/P1959 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 1979 612,712 11,909 7,381,193 221,000 2,328 3,171 95 1989 704,665 30,358 11,775,459 327,354 3,456 3,407 95 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 2001 901,834 33,124 23,532,666 633,306 3,942 5,970 161 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 2005 561,250 23,161 26,227,636 757,971 4,169 6,291 182 2006 511,646 23,792 26,739,282 781,763 4,135 6,467 189 2007 501,938 21,572 27,241,220 803,335 4,145 6,572 194 2008 518,348 27,020 27,759,568 830,355 4,182 6,638 199 2009 458,364 20,036 28,217,932 850,391 4,905 5,753 173 2010 548,191 29,367 28,766,123 879,758 5,143 5,593 171

* net of termination** regular SSS employees onlyWorker (W), Employer (E), SSS Personnel (P)

AssETs REsERVEs iNVEsTMENTsYear AMT % iNC / (dEC) AMT % iNC/ (dEC) AMT % iNC / (dEC)1959 68.2 67.6 66.2 1969 963.2 1,313.3 953.7 1,310.3 919.7 1,288.9 1979 7,258.2 653.6 7,142.6 648.9 7,098.2 671.8 1989 48,200.9 564.1 47,693.6 567.7 46,944.2 561.4 1999 176,875.1 267.0 165,820.6 247.7 168,336.8 258.6 2000 181,741.0 2.8 170,408.7 2.8 166,183.1 (1.3) 2001 163,113.6 (10.2) 161,234.3 (5.4) 151,015.0 (9.1) 2002 162,606.4 (0.3) 159,547.7 (1.0) 149,211.0 (1.2) 2003 170,875.3 5.1 168,137.3 5.4 155,939.7 4.5 2004 179,084.1 4.8 176,386.1 4.9 160,500.4 2.9 2005 199,713.2 11.5 196,287.5 11.3 181,775.4 13.3 2006 228,444.5 14.4 224,995.9 14.6 205,225.5 12.9 2007 247,737.2 8.4 243,016.7 8.0 225,565.3 9.9 2008 233,122.2 (5.9) 225,602.9 (7.2) 211,355.2 (6.3) 2009 272,610.7 16.9 265,329.8 17.6 248,641.4 17.6 2010 297,591.3 9.2 289,095.0 9.0 273,265.6 9.9

CONsOLidATEd gROWTh Of AssETs, REsERVEs & iNVEsTMENTs(Amounts in Million Pesos)

AssETs REsERVEs iNVEsTMENTsYear AMT % iNC / (dEC) AMT % iNC / (dEC) AMT % iNC / (dEC)1959 68.2 67.6 66.2 1969 963.2 1,312.3 953.7 1,310.8 919.7 1,289.3 1979 6,750.7 600.9 6,641.6 596.4 6,608.6 618.6 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 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) 2002 143,098.5 (1.2) 139,660.0 (1.6) 130,967.2 (2.6) 2003 150,618.9 5.3 147,730.9 5.8 138,909.2 6.1 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 2007 224,928.6 9.3 220,097.1 8.8 211,167.9 12.5 2008 209,535.8 (6.8) 201,907.9 (8.3) 192,663.2 (8.8) 2009 247,891.3 18.3 240,502.0 19.1 228,919.5 18.8 2010 271,267.5 9.4 262,663.2 9.2 252,630.6 10.4

sss gROWTh Of AssETs, REsERVEs & iNVEsTMENTs(Amounts in Million Pesos)

investment and Operating ExpensesYear Contributions Other income Benefits & Others Net Revenue1957 - 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 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 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 2008 67,668.2 27,848.4 66,820.3 6,636.3 22,059.9 2009 71,166.9 21,988.3 70,963.9 6,967.8 15,223.6 2010 77,957.0 27,016.4 76,088.1 7,014.1 21,871.2

sss PROgREss Of OPERATiONs(Amounts in Million Pesos)

AssETs REsERVEs iNVEsTMENTsYear AMT % iNC / (dEC) AMT % iNC / (dEC) AMT % iNC / (dEC)1979 507.5 501.0 489.6 1989 5,226.7 929.8 5,226.7 943.2 5,163.0 954.6 1999 17,186.9 228.8 17,186.8 228.8 16,535.0 220.3 2000 18,415.3 7.1 18,406.0 7.1 16,956.9 2.6 2001 19,303.0 4.8 19,277.1 4.7 16,494.0 (2.7) 2002 19,508.0 1.1 19,887.7 3.2 18,243.8 10.6 2003 20,406.4 4.6 20,406.4 2.6 17,030.5 (6.7) 2004 21,226.7 4.0 21,226.7 4.0 17,195.7 1.0 2005 22,143.3 4.3 22,143.3 4.3 15,240.4 (11.4) 2006 22,679.9 2.4 22,679.9 2.4 17,466.1 14.6 2007 22,919.6 1.1 22,919.6 1.1 14,397.4 (17.6) 2008 23,695.1 3.4 23,695.1 3.4 18,692.0 29.8 2009 24,827.9 4.8 24,827.9 4.8 19,721.9 5.5 2010 26,431.8 6.5 26,431.8 6.5 20,635.0 4.6

EMPLOYEEs’ COMPENsATiON ANd sTATE iNsURANCE fUNd gROWTh Of AssETs, REsERVEs & iNVEsTMENTs(Amounts in Million Pesos)

investment and Operating ExpensesYear Contributions Other income Benefits & Others Net Revenue1975 - 1979 477.0 104.9 72.2 8.8 500.9 1980 - 1989 2,033.6 3,526.0 732.3 100.8 4,726.5 1990 - 1999 4,214.3 15,985.9 5,881.6 1,085.7 13,233.0 2000 435.0 2,123.9 1,154.1 185.7 1,219.2 2001 459.8 1,848.8 1,201.5 235.8 871.2 2002 485.6 1,803.8 1,305.3 251.0 733.0 2003 785.7 1,068.5 1,183.5 131.8 * 538.9 2004 852.2 1,323.2 1,139.2 135.3 * 900.9 2005 887.1 1,444.4 1,089.0 132.5 * 1,110.0 2006 910.2 1,154.9 1,070.4 130.8 * 863.9 2007 1,059.6 752.2 1,081.2 121.4 * 609.2 2008 1,211.1 1,240.6 1,097.0 109.3 * 1,245.4 2009 1,183.9 997.3 1,086.0 106.8 * 988.4 2010 1,315.9 831.5 1,086.0 100.3 * 961.0

* Excludes SS-EC Share in the Corporate Operating Budget of ECC and OSHC

EMPLOYEEs’ COMPENsATiON ANd sTATE iNsURANCE fUNd PROgREss Of OPERATiONs(Amounts in Million Pesos)

investment and Operating ExpensesYear Contributions Other income Benefits & Others Net Revenue1957 - 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 5,599.3 2,677.9 1,584.0 504.4 6,188.8 1980 - 1989 25,114.6 32,879.0 15,791.1 1,852.7 40,349.9 1990 - 1999 158,632.2 139,020.1 158,355.9 17,177.0 122,119.4 2000 30,320.5 12,341.1 33,889.2 4,202.1 4,570.4 2001 31,371.8 14,238.9 39,015.0 4,447.4 2,148.2 2002 34,187.7 11,705.0 40,871.6 4,591.5 429.6 2003 39,420.4 12,763.1 42,806.4 4,776.6 * 4,600.5 2004 43,935.8 8,853.3 44,882.5 5,327.3 * 2,579.3 2005 47,483.4 12,316.3 46,269.8 5,638.4 * 7,891.4 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 2008 68,879.3 29,089.0 67,917.4 6,745.6 * 23,305.3 2009 72,350.9 22,985.6 72,050.0 7,074.6 * 16,212.0 2010 79,272.9 27,847.9 77,174.2 7,114.4 * 22,832.2

* Excludes SS-EC Share in the Corporate Operating Budget of ECC and OSHC

CONsOLidATEd PROgREss Of OPERATiONs(Amounts in Million Pesos)

Historical Data

sss COVERAgE ANd PERsONNEL fORCE

48 492 0 1 0 A N N U A L R E P O R T

From Left to Right: Com. Marianita O. Mendoza, Com. Daniel L. Edralin, Com. Eliza Bettina R. Antonino, President and CEO and Vice Chairman Emilio S. De Quiros, Jr., Chairman Juan B. Santos, Secretary of Labor and Com. Rosalinda Dimapilis-Baldoz, Com. Diana Pardo-Aguilar, Com. Bienvenido E. Laguesma, Com. Ibarra A. Malonzo

SOCIAL SECURITy COMMISSION

50 512 0 1 0 A N N U A L R E P O R T

From Left to Right: (top photo) President and CEO Emilio S. de Quiros, Jr., VP Marissu G. Bugante, Special Assistant to the President and CEO Edmund P. Lee, Department Manager 3 Joselito A. Vivit, Special Assistant to the President and CEO Maria Lourdes N. Mendoza, AVP Santiago Dionisio R. Agdeppa, and SVP Amador M. Monteiro

From Left to Right: (bottom photo) AVP Joel P. Palacios, AVP Antonette L. Fernandez, CEO V Juanita L. Reyes, VP Rizaldy T. Capulong, and VP May Catherine C. Ciriaco

From Left to Right: (top photo) VP Nicholas C. Balbuena, VP Alfredo S. Villasanta, AVP Hidelza B. Castillo, AVP Renato N. Malto, AVP Elvira G. Alcantara-Resare, SVP Miguel E. Roca, Jr.

From Left to Right: (bottom photo) VP Gwen Marie Judy D. Samontina, VP Antonio G. Maralit, VP Jesse J. Caberoy, AVP Daisy S. Real, AVP Johnsy L. Mangundayao

OFFICES UNDER PRESIDENT AND CEO CORPORATE SERVICES SECTOR

52 532 0 1 0 A N N U A L R E P O R T

From Left to Right: AVP Renato M. Custodio, Vice Chairman Emilio S. De Quiros, Jr., Chairman Juan B. Santos, VP Milagros M. Pagayatan

From Left to Right: AVP Alberto C. Alburo, AVP Vicente A. Curimao, AVP Josie G. Magana, EVP and Chief Actuary Horacio T. Templo, AVP Consolacion M. Cancio, VP Naciancino L. Monreal, Special Assistant to the Executive Officer BOS Reynaldo C. Oriel

SSC CHAIRMAN, SSS PRESIDENT & CEO AND SECRETARY TO THE COMMISSION

From Left to Right: VP Mario R. Sibucao, AVP Leticia B. Ong, President and CEO Emilio S. de Quiros, Jr., SVP Judy Frances A. See, VP Antonio S. Argabioso, VP Agnes E. San Jose

PRESIDENT & CEO AND PROGRAM MANAGEMENT GROUP BRANCH OPERATIONS SECTOR - NATIONAL CAPITAL REGION OPERATIONS GROUP AND OFFICES UNDER EVP BOS

From Left to Right: OIC Emmanuel A. Trinidad, AVP Ma. Luz C. Generoso, AVP Mariano Pablo S. Tolentino, EVP Edgar B. Solilapsi, AVP Lilia S. Marquez, VP Rizaldy T. Capulong, VP Gamelin Z. Oczon

INVESTMENTS SECTOR

54 552 0 1 0 A N N U A L R E P O R T

AMELIAA.GUILLERMOWelcome Branch

LUZVIMINDAJ.LIMCAUCOBinondo Branch

ADELINAA.LIQUEMalabon Branch

MA.LUZN.BARROS-MAGSINOManila YMCA Branch

PRISCILA F. MARALITCainta Branch

FELIZARDOB.MINOR,JR.San Mateo Branch

FERNANDO O. NICOLAS*Marikina Branch

NCR SOUTH DIVISION

SONIA C. ABRERAMakati-GilPuyatBranch

HELEN L. ABOLENCIASan Juan Branch

MARIARITAS.AGUJAMakati Ayala Branch

TERESITA L. ARAOSPasay-Roxas Boulevard Branch

LETICIAG.BARBERSAlabang Branch

RHODORAG.BONITAPasay-Taft Branch

MA.LOURDEST.FLORESMakati JP Rizal Branch

CRISTINEGRACEB.FRANCISCOParañaque Branch

FEMARIEF.GERALDOTaguig Branch

LIBERTYA.GORDOVEZ*San Juan Branch

MARCIANAA.MARQUEZMandaluyong Branch

AMALIA N. TOLENTINOLas Piñas Branch

LUZON OPERATIONS GROUP

LUZON NORTH DIVISION

JOSEPHINE C. ABRILLaUnionBranch

ESTRELLAR.ARAGONCauayan Branch

PORFIRIO M. BALATICOTuguegarao Branch

JANET D. CANILLASVigan Branch

BENEDICTAB.GARCIABangued Branch

BENJAMINR.LOPEZBaguio Branch

ROMEO E. REYESSantiago, Isabela Branch

PAULINAYG.SANTOS*Solano Branch

NANCYM.UMOSOLaoag Branch

ABELARDOC.YOGYOGBontoc Branch

SOCIAL SECURITY COMMISSION

JUANB.SANTOSChairman EMILIOS.DEQUIROS,JR.Vice-Chairman

DIANAPARDO-AGUILARDANIEL L. EDRALINELIZABETTINAR.ANTONINOBIENVENIDOE.LAGUESMAMARIANITAO.MENDOZAIBARRAA.MALONZOROSALINDAD.BALDOZMembers

SSS MANAGEMENT

PRESIDENT and CEO

EMILIOS.DEQUIROS,JR.President and Chief Executive Officer

EXECUTIVE VICE PRESIDENT

EDGARB.SOLILAPSIInvestments Sector

HORACIO T. TEMPLOBranch Operations Sector

SENIOR VICE PRESIDENT

JOSEB.BAUTISTALuzonOperationsGroup

EDDIE A. JARAVisayasandMindanaoOperationsGroup

AMADOR M. MONTEIROChief Legal Counsel

MIGUELE.ROCA,JR.Information Technology Management Group

JUDYFRANCESA.SEEProgramManagementGroup

VICE PRESIDENT & EQUIVALENT RANK

ANTONIOS.ARGABIOSOCoverage and Collection Program Management Division

NICHOLASC.BALBUENAComputer Operations Division

MARISSUG.BUGANTEPublic Affairs and Special Events Division

JESSE J. CABEROYHuman Resource Management Division

RIZALDYT.CAPULONGCapitalMarketDivision/ActuarialDepartment and concurrent Deputy Chief Actuary

MAY CATHERINE C. CIRIACOManagement Services and Planning Division

ANTONIOG.MARALITPlanning and Research Division

MARIALOURDESN.MENDOZAOffice of the President and CEO

NACIANCINO L. MONREALNCROperationsGroup

GAMELINZ.OCZONTreasury Division

MILAGROSM.PAGAYATANOffice of the Commission Secretary

GWENMARIEJUDYD.SAMONTINATechnical Support Division

AGNESE.SANJOSEBenefits Program Management Division MARIOR.SIBUCAOService Delivery Program Management Department

ALFREDO S. VILLASANTAGeneralServicesDivision

ASSISTANT VICE PRESIDENT, DIVISION HEAD AND EQUIVALENT RANK

VILMAP.AGAPITOLuzon Central Division

SANTIAGODIONISIOR.AGDEPPAOperations Legal Department

ALBERTOC.ALBURONCR Central Division

ELVIRAG.ALCANTARA-RESAREFinancial and Budget Division

CONSOLACION M. CANCIONCR South Division

HIDELZAB.CASTILLOApplication Systems Division

RENATOM.CUSTODIOCommission Legal Department - I

AIDA V. DELOS SANTOSLuzon South Division

NILOD.DESPUIGBicol Division

ANTONETTEL.FERNANDEZInternal Audit Services Division

RODRIGOB.FILOTEOWestern Mindanao Division

JOSEFINA O. FORNILOSNorthern Mindanao Division

MA.LUZC.GENEROSOHousing Department

EDMUNDD.LEEOffice of the President and CEO

JOSIEG.MAGANANCR North Division

RENATO N. MALTORecords and Information Management Department

JOHNSYL.MANGUNDAYAOOperations Accounting Division

LILIAS.MARQUEZCorporate Bonds and Loans Department

LUISV.OLAISLuzon North Division

LETICIAB.ONGMedical Program Management Department

REYNALDO C. ORIELOffice of the EVP for Branch Operation Sector

JOEL P. PALACIOSMedia Affairs Department

EMMANUELR.PALMASouthern Mindanao Division

DAISY S. REALHuman Resource Staffing and Development Department

JUANITAL.REYESOffice of the President and CEO

HELEN C. SOLITOCentral Visayas Division

MANOLITOC.TAGALOGWestern Visayas Division

MARIANO PABLO S. TOLENTINOAsset Management Department

EMMANUELA.TRINIDAD*Cash Department

JOSELITO A. VIVITCorporate Legal Department

DEPARTMENT HEAD AND OFFICER-IN-CHARGE

LEO CALIXTO C. ABAYONNetwork and Communications Department

ROBERTOB.BAUTISTAInternational Affairs Department

AUREAG.BAYOffice of the EVP for Branch Operations Sector

MARILOUM.BETICInvestments Accounting Department

FELIPE R. CABAÑERO Computer Resource Management Department

REGINALDG.CANDELARIA*Equities Department

ELEONORA Y. CINCOQuality Management Department

ROSA T. CRISOSTOMOPlanning and Standards Department

GLORIAY.CUISIABranch Evaluation Department

CELSOC.CUNANANData Center Operations Department

ELPIDIOS.DECHAVEZBranch Support Services Department

MARIEADAANGELIQUET.DESILVAMember Loans Program Management Department

EUGENIAD.DELACRUZMember Relations Department

NORMITA M. DOCTORSickness, Maternity and Disability Program Management Department

BELINDA B. ELLAGeneralAccountingDepartment

JOCELYNM.EVANGELISTABranch Operations Audit Department

ROGELIOA.FUNTELARFront-End IT Support Department

SONIAP.GUINTO*Corporate Communications Department

ROSALINA C. MANANSALACollection Data Processing and Reconciliation Department

MARY ANN R. MANDAPCommission Secretariat Department

NORA M. MERCADOSelf-Employed and Voluntary Member Program Management Department

VAN RENE M. ORPILLAApplications Development and Maintenance Department - I

ALANGENEO.PADILLAApplications Development and Maintenance Department - III

VENUSD.PASCUALBranch Accounting Department

FAUSTINOP.PICONES*Technology Research Department

VICTORIAA.POQUIZHealth Care Department

DAMIANAA.QUEZONApplications Development and Maintenance Department - II

HYDEER.RAQUIDSupport Services Audit Department

GUILLERMOM.URBANO,JR.*Investments Research and SupportDepartment

CECILIA S. ROA*Contributions Accounting Department

MA. SALOME E. ROMANOInformation Systems Security Department

NESTOR R. SACAYANEngineering and Maintenance Department

JOSEANTONIOL.SALAZARID Card Production Department

CARMEN O. SORIANOManagement Support Services Department

SYLVETTE C. SYBICOForeign Branch Expansion and Monitoring Department

MARISSAL.TIZONHuman Resource Services Department

ARNOLD A. TOLENTINOManagement Information Services Department

IKEA.TUBIOFraud Investigation Department

JOY A. VILLACORTAOverseas Filipino Workers Program Management Department

MARIVIC S. VILLARAMAEnterprise Systems Support Department

ANITA A. VILLENAOffice Services Department

JEANV.LAGRADABudget Department

BRANCH HEAD/OFFICER-IN-CHARGE

NATIONAL CAPITAL REGION (NCR) OPERATIONS GROUP

NCR CENTRAL DIVISION

ARTHURO.ABARYNovaliches Branch

JOCELYNQ.GARCIASan Francisco Del Monte Branch

JOSEFINA EDITA F. MATACommonwealth Branch

ELIZABETHC.REYESDiliman Branch

LORELEIB.SOLIDUMCubao Branch

NCR NORTH DIVISION

CYNTHIA O. BARCELONPasig Shaw Branch

AVELINAM.BAUTISTAValenzuela Branch

VIRGINIAF.CALASAHANPasig Palatiw Branch

MILAGROSN.CASUGAKalookanBranch

ZARAM.DIZONLegarda Branch

BERLITA F. FABREROAntipolo Branch

SSC & SSS

MANAGEMENT DIRECTORy

From Left to Right: AVP Emmanuel R. Palma, AVP Helen C. Solito, AVP Rodrigo B. Filoteo, EVP and Chief Actuary Horacio T. Templo, SVP Eddie A. Jara, AVP Josefina O. Fornilos, AVP Manolito C. Tagalog

BRANCH OPERATIONS SECTOR – VISAYAS AND MINDANAO OPERATIONS GROUP

From Left to Right: EVP and Chief Actuary Horacio T. Templo, AVP Aida V. Delos Santos, SVP Jose B. Bautista, Cluster Head Vilma P. Agapito, Cluster Head Nilo D. Despuig, AVP Luis V. Olais

BRANCH OPERATIONS SECTOR - LUZON OPERATIONS GROUP

*Officer-in-Charge

56

LUZON CENTRAL DIVISION

JOSE ALVIN M. ALTREUrdanetaBranch

SIMPLICIAM.BANIAGOMalolos Branch

MARILOUM.SANTOS*Iba Branch

NORMITAM.CRUZMariveles-BEPZBranch

MARITES A. DALOPESta. Maria Branch

PABLITA A. DAVIDMeycauayan Branch

CORITAM.GADUANGPampanga Branch

ELIZABETHR.GARCIABalanga Branch

ROLANDOC.MENDOZABaler Branch

MARIAMAXIMAC.MACARAEGOlongapo Branch

ALBINA LEAH C. MANAHANBaliuag Branch

LAURAM.MARIANOAngeles Branch

NARCISOM.MARTINEZ,JR.Alaminos Branch

MONALISA C. NARDOCamiling Branch

CEASARP.SALUDODagupan Branch

MARILOUM.SANTOS*Iba Branch

GUILLERMOS.TARUCTarlac Branch

LUZON SOUTH DIVISION

JESREL H. ANCHETABoac Branch

GREGORIOP.ASENDIDOCalapan Branch

SANTISIMA ROSARIO C. BAACPuerto Princesa, Palawan Branch

CORAZONL.BALAGBISBatangas Branch

VICTORINAG.CARLOSTagaytay Branch

VIRGINIAS.CRUZBacoor Branch

JOSEPHINE S. HIPOLITO Sta. Cruz Branch

NELSON P. IBARRACalamba Branch

VICTORIAA.LIWANAGLucena Branch

ROBERTO D. MARCELOSan Jose, Occidental Mindoro Branch

ROBERTOS.PAGAYUNANLipa Branch

EXEQUIELO.PANGANIBANEPZABranch

TITO A. NAVACarmona Branch

MARINAPAULINAG.PANTEInfanta Branch

ANTONIO V. SORIANOBiñan Branch

WENCESLAOG.VIRTUCIO,JR.San Pablo Branch

BICOL DIVISION

NILO D. ALMOSERAMasbate Branch

DIVINA T. AVILAVirac Branch

ALBERTO R. BONAFE, JR.Sorsogon Branch

ANTONIO A. CASIMIROTabaco Branch

BEATRIZC.GUMABAOGoaBranch

CLARIBELL.REBUENONaga Branch

ELENITA S. SAMBLEROLegaspi Branch

VIRGILIOA.SANTIAGODaet Branch

PRISCO S. SORSONAIriga Branch

VISAYAS AND MINDANAO OPERATIONS GROUP

CENTRAL VISAYAS DIVISION

GEMMAC.CABERTEOrmoc Branch

LILIBETHA.CAJUCOMTacloban Branch

NICETA M. CARRETASCabalogan Branch

ERIC A. CORONADOToledo Branch

MARIO V. CORROCebu Branch

MAGDALENAH.DINCILLO*Mandaue Branch

RODRIGOB.GREGANAMaasin Branch

ALBERTO L. MONTALBOLapu-Lapu Branch

BENJAMIN A. POMBOCalbayog Branch

MARINO B. TALICTICTagbilaran Branch

WESTERN VISAYAS DIVISION

ELVIRA B. BANICOIloilo Branch

LILANI B. BENEDIANBais Branch

RAULA.CASIANOBacolod Branch

ISAAC P. CIOCON, JR.Kalibo,AklanBranch

FELICITAS A. DEMANDANTESagay Branch

REYNALDO V. ESPINOSARoxas Branch

SOCORRO B. FERRERKabankalanBranch

JANET.GARGOLESVictorias Branch

VICTOR M. NICORBago City Branch

ESTEBAN L. PANES, JR.San Jose, Antique Branch

EMILIA B. SOLINAPSan Carlos Branch

IRENEO T. VILLAFLORDumaguete Branch

NORTHERN MINDANAO DIVISION

EDWIN M. ALOCagayan de Oro Branch

PERKINSB.CALIXTROCamiguin Branch

BENIGNOJ.DAGANI,JR.Surigao Branch

ANTONIOG.FABIAValencia Branch

ANNAPEARLJ.FUENTESOzamis Branch

JOSE ROEL J. HERBIETOOroquieta Branch

MA. RAINE L. JAMEROButuan Branch

CHERYL V. JARIOLIligan Branch

OSWALDOB.MONTENEGROTandag Branch

MARILYN O. TAMAYOGingoogBranch

SOUTHERN MINDANAO DIVISION

JOSE S. CATOTO, JR.GeneralSantosCityBranch

JOVE L. COLASITODavao Branch

RIZALITOALBERTOC.DELEONToril Branch

SERAFING.HINGCOKidapawanBranch

EDGARP.JUANICHDigos Branch

SUKARNOD.PENDALIDAYCotabato City Branch

ROSELANEB.PLAZAMati Branch

SUZETTEH.PURIFICACIONTacurong Branch

JULIOUSJ.WALESBislig Branch

VALERIANO P. WENCESLAO, JR.Tagum Branch

REDENTOR S. VIOLAKoronadalBranch

WESTERN MINDANAO DIVISION

JAMESB.BUCKLYPagadian Branch

ELIZABETHG.CABATINGANZamboangaBranch

JAIMES.CASUMPANGBasilan Branch

RUDYM.LACANDALOIpil Branch

GODOFREDOM.MARTINEZDipolog Branch

FERDAUSIA.SALASAJolo Branch

SSS FOREIGN REPRESENTATIVE OFFICES

FOREIGN BRANCH EXPANSION MONITORING DEPARTMENT & POEA

SONIAA.DOMINGOSSS POEA Office

ASIA & PACIFIC

MARIVICG.RUTORBrunei Representative Office

ROBERTO V. ROLDANHongKongRepresentativeOffice

JOSEFINAA.MADUROSingapore Representative Office

FRENELIEANNL.ONGTaipei, Taiwan Representative Office

MIDDLE EAST

WILMAM.ORTIZAbuDhabi,UAERepresentativeOffice

ABDAWIYAK.NAVARROAl-khobar,KSARepresentativeOffice

BENNETTEA.CUETODoha, Qatar Representative Office

HARRY A. RACHOJeddah,KSARepresentativeOffice

FRANCISCOU.UYKuwaitRepresentativeOffice

DANILO Q. CALAPERiyadh,KSARepresentativeOffice

EUROPE

ALFREDO JOSE I. RECIO, JR. London,UnitedKingdomRepresentativeOffice

THELMAV.VENTURANZAMilan, Italy Representative Office

FRANCISCO B. BACOLRome, Italy Representative Office

2010 ANNUAL REPORT COMMITTEE

Chairperson: VP May Catherine C. Ciriaco

Vice Chairperson: VP Marissu g. Bugante

Members: sVP Jose B. Bautista VP Antonio s. Argabioso VP Rizaldy T. Capulong AVP Ma. Luz C. generoso AVP Elvira g. Alcantara-Resare Atty. Joselito A. Vivit Ms. Marissa L. Tizon

Consultant: Ms. Maria Lourdes N. Mendoza

Secretariat: Ms. grace B. Burgos Mr. Virgilio M. Macapagal Ms. guia O. Ongchangco Ms. gilby g. Oribello Mr. Zandro Carlos P. sison Mr. ireneo Ma. P. Taala ii

*Officer-in-Charge

sss Building, East Avenue, dilimanQuezon City, Philippines

Tel. Nos. 920-6401 / 920-6446E-mail: member_relations@sss.gov.ph

www.sss.gov.ph