WHEN is the best time to plan for retirement?
Financial advisers agree that it is never too early or too late to start preparing for one’s retirement. Many of those who are about to retire often wished that they had started saving much earlier.
Why is there a need to prepare for retirement? Obviously, for financial security, which does not happen overnight but is something that everyone must plan for and commit to. Financial experts say that the key to a secure retirement is to plan ahead. Determine how much is needed for one’s retirement, start saving, keep saving and stick to one’s goal.
According to news reports on the East Asia Retirement Survey, conducted by Richard Jackson and Tobias Peter of the Global Aging Institute—which included China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam—“only two-thirds of today’s Filipino workers expect to receive pension benefits when they retire.” The survey also showed that Filipinos worry about their retirement security. They are worried about being destitute during retirement, using up their savings and being a burden to their children. Despite these fears, the survey said, not too many Filipino workers are taking steps to secure their future. “…just 12 percent report that they are saving more for retirement now than they were three years ago, fewer than any other country surveyed.”
Well, here’s good news to Social Security System (SSS) members who are among those expecting to receive pension benefits when they retire. They now have a way to save more for their retirement years through the SSS PESO (Personal Equity and Savings Option) Fund. The SSS PESO Fund is a voluntary provident fund offered to SSS members on top of the regular Social Security program. Members can save their excess earnings and build a more comfortable retirement through tax-free earnings and benefits, sovereign guaranteed investments and guaranteed earnings.
This program is open to all employees, self-employed, voluntary and overseas Filipino workers (OFWs) who: a) are below 55 years old; b) have paid contributions in the regular SSS program for at least six consecutive months within the 12-month period immediately prior to the month of enrollment; c) if self-employed, voluntary and OFW members, should be paying the maximum amount of contributions under the regular SSS program; and d) have not filed any final claim under the regular program.
Each member will be allowed a maximum contribution of P100,000 per year and a minimum of P1,000 per contribution.
The contributions and earnings of a member will be allocated to three types of accounts, namely, 1) retirement or total disability (65 percent, with guaranteed earnings based on 5-year T-bond rates; 2) medical (25 percent, with guaranteed earnings based on 364-day T-bill rates); and 3) general purpose (10 percent, with guaranteed earnings based on 364-day T-bill rates). No withdrawals are allowed from the retirement or total disability account.
If one starts saving P100,000 a year at age 40, he would have contributed a total of P2 million by the time he reaches age 60. Assuming that the fund growth rates are 3.75 percent, 1.85 percent and 1.85 percent per annum (may be higher or lower) for retirement account, medical account and general- purpose account, respectively, the member will earn P500,000 in 20 years, giving him a total of P2.5 million upon retirement.
Ultimately, one is responsible for his financial future.
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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.
1 comment
Very nice concept. But how many Filipinos can afford to save P100,000 a year? That’s already more than half of most what the average employee earns.
Besides the PESO fund, why can’t the employee have other additional “contribution programs” (such as an extended SSS contribution) with the same regular SSS benefits?
Private banks and insurance companies offer better products. The SSS PESO fund is just another savings account. What people need is a monthly pension when they retire, of which they expect more from SSS,
I think the SSS should have come up with a better concept than the PESO fund.
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