Irregular and overpriced purchases are a curse for the government and this has also afflicted the state pension fund, the Social Security System (SSS).

In its 2024 report, the Commission on Audit (CoA) flagged the Social Security System’s purchase of 143,424 rolls of toilet paper worth P13.195 million, or P92 per roll, under a verbal agreement without supporting documentation or a formal memorandum of understanding.

The cost of a single toilet paper roll ranges from roughly P30 to P50 for premium, significant, or specialized rolls, with typical prices often falling between P10 and P20 per roll when bought in multi-packs.

The report said that the laxity posed a risk of loss or deterioration inconsistent with Section 4 of Presidential Decree 1445 and Section 28 of the General Appropriations Act which state that the inventory of supplies, materials, and equipment to be procured shall not exceed the agency’s two-month requirement.

The CoA cited questions and deficiencies in the purchase of toilet paper, including a breach of the agency’s two-month supply requirement and the supplier’s custody of 116,046 rolls remaining without an agreement. It noted the absence of a policy for procuring supplies and equipment.

According to the state auditors, the money spent on the excessive purchase could have funded pension benefits for roughly 2,000 SSS retirees or funeral benefits for 650 deceased members, two areas where CoA also found deficiencies.

In its 2024 Annual Audit Report (AAR), CoA flagged SSS’ disbursement of cash incentives of up to P50,000 each to 6,525 employees, totaling P333 million.

The payments were made under the agency’s Prestige Award which, according to internal memos, recognize employees whose achievements bring further acclaim to the institution.

The officers of the SSS at the time were Finance Secretary (now Executive Secretary) Ralph Recto as chairperson, Rolando Macasaet as president and CEO; ex officio member Bienvenido Laguesma and Commissioners Diana Pardo Aguilar, Jose Julio, Anita Bumpus Quitain, Eva Arcos, Robert Joseph de Claro and Manuel Argel Jr.

These deficiencies posed risks of loss and/or deterioration that were inconsistent with Section 4(4) of Presidential Decree 1445.

On 8 May 2024, the SSS began procuring 143,424 toilet paper rolls in compliance with its 2024 Annual Procurement Plan (APP).

Corresponding Inspection and Acceptance Reports (IARs) were then issued, confirming receipt of the toilet paper rolls in accordance with the CoA.

Due to SSS’ limited warehouse capacity, 116,046 rolls were retained in the supplier’s premises.

The CoA said the situation indicated procurement activities undertaken without sufficient planning and without consideration of existing warehouse capacity, thereby posing risks of loss, damage, and deterioration of the stored items.

“Verification with the supplier revealed that the arrangement with SSS was based solely on a verbal agreement, without any supporting documentation or formal memorandum of understanding,” the report indicated.

The lack of documentation violated a fundamental principle of government transactions and operations, as stated in Section 4(4) of Presidential Decree No. 1445, which requires that government funds or property be used only with proper authorization and in accordance with the law.

The CoA recommended that SSS strictly comply with the two-month requirement under Section 28 of the 2024 GAA, beginning on the 2025 procurement cycle, and “exercise prudence” on the use of government resources through ensuring proper procurement planning and conducting a complete inventory.

In addition, CoA recommended that the relevant agency institutionalize procurement planning guidelines by the fourth quarter of 2025 to ensure future procurements align with the agency’s actual storage capacity and operational needs.

The CoA also found that the SSS continued to remit pensions to deceased beneficiaries, resulting in P24.811 million in overpayments. The audit stressed that this “highlights significant weaknesses in the SSS’ financial safeguards,” contributing to the loss of government funds and risking the long-term viability of the pension system.

P50-K incentives galore

The expensive toilet paper was one of many questionable transactions CoA flagged in the SSS, which included cash incentives to thousands of employees, procurement irregularities, benefit underpayments, and overpayments to deceased pensioners.

Another questionable move by the SSS was the grant of Prestige Award cash incentives of up to P50,000 each to its 6,525 officials and employees, totaling P333 million, pursuant to the Program on Awards and Incentives for Service Excellence (PRAISE), “without substantiating the savings generated from innovations, superior accomplishments, or other personal efforts.”

The state auditors indicated that “other awards under the program were granted at a fixed amount of cash incentive regardless of the actual savings generated from the personal efforts recognized. These practices resulted in irregular and excessive expenditures, which are not allowed in an audit.”

The CoA clarified that monetary rewards may be granted only when employee accomplishments result in measurable monetary savings, and even then the award must not exceed 20 percent of the savings generated.

The commission has since ordered the SSS to submit an evaluation report showing how the incentives were justified. Without proper documentation, the auditors said the SSS must refund all unsubstantiated cash awards.

In addition, the AAR also revealed nearly P3 million in unpaid funeral benefits due to computational lapses. The CoA reported P2.833 million in underpayments, noting that 293 of 1,584 sampled claims were incorrectly computed due to the incomplete assessment of contributions.

Last January, SSS president and CEO Robert Joseph de Claro addressed another concern raised by the state auditor, this time regarding uncollected employer contributions, which CoA estimated at around P89 billion.

“It’s an old CoA report that talks about the delinquency of employers to the SSS. Since then, it has been P89 billion. After reconciliation, as of October 2024, that number has gone down to P46 billion, and we are constantly working on trying to assess other sources of this discrepancy,” De Claro said.

The SSS also came under fire in 2017 after four of its high-ranking officials allegedly profited from insider trading.

This month, the SSS disbursed P18.8 million in 13th-month pensions to approximately 3.66 million pensioners. The AAR said the SSS handled over P200 billion in assets as of the end of 2024.