ASIA is now facing an imminent graying of its population which is predicted to be most rapid between 2010 and 2030, based on studies by the Organization for Economic Cooperation and Development. In the Philippines an improved national medical plan and increased awareness on wellness programs are making the aged live longer.
In a situation like this, individual pensions and a very reliable and consistent pension-fund system are critical.
But, generally, pensions are usually inadequate because of the relatively low coverage by the formal pension systems; the withdrawal of savings before retirement is also common; pension savings are often taken as lump sums; and pensions are not automatically adjusted to changes in the cost of living.
In the Philippines the Social Security System (SSS), for instance, operates on a defined-benefit scheme. This means that benefits, like sickness, maternity, old-age, disability and death pensions, are predetermined
using a formula based on the number of contributions paid and a member’s monthly-salary credit, and not dependent on the amount of contributions or investment earnings generated by the SSS. As such, every new member of SSS is assured of the type and amount of benefits that could be obtained from the system under certain terms.
Personally, I think that preparing for retirement is an individual cause. While we rely on the SSS and the Government Service Insurance System, in the case of government employees, I believe we should save money now during our productive years to live comfortable lives in our old age.
Recently, the SSS started accepting applications for its PESO Fund Program, or Personal Equity Savings Option Fund, in 10 pilot areas. As its name suggests, the program speaks of an optional-savings mechanism for SSS members which offers guaranteed earnings that are based on prevailing Treasury-bill rates. Members who are no more than 54 years old and have at least six consecutive contributions under the SSS regular program within the last 12 months prior to enrollment are qualified to join. They may contribute up to a maximum of P100,000 every year.
Employed members, regardless of the amount of their current monthly contributions, may join the SSS PESO Fund, while self-employed, voluntary and overseas Filipino workers members should be paying the maximum SSS contribution to be able to contribute in the SSS PESO Fund.
For the pilot implementation of the SSS-PESO Fund, the following branches in the National Capital Region are ready to accept applicants: Diliman, Cubao, San Francisco del Monte, Pasig-Shaw, Mandaluyong, Taguig, Makati-Gil Puyat, Alabang, Legarda and Pasay-Roxas Boulevard. By September 2015, all SSS branches nationwide will accept applications to the PESO Fund.
SSS Peso Fund savings are allocated for retirement, medical and general purpose, such as education, housing, livelihood and unemployment. Only the portions allotted for medical and general purpose may be withdrawn before the member’s date of retirement, subject to penalties if withdrawals are made before the five-year retention period is over.
Most people who have worked 30 to 40 years—or practically all their lives—look forward to the time when they can relax and enjoy the fruits of their labor in the company of their loved ones. Many dream of traveling and doing long-forgotten things that they love doing during their retirement years. We all want this kind of ideal setup, but the question is, have we prepared for it? Have we saved enough for our retirement?
For more information about the SSS and its programs, call our 24-hour call center at (632) 920-6446 to 55, Monday to Friday, or send an e-mail to member_relations@sss.gov.ph.
Susie G. Bugante is the vice president for public affairs and special events of the Social Security System. Send comments about this column to susiebugante.bmirror@gmail.com.