This is the second of a series of columns on aging. My last column talked about how rapid aging across the East Asia and Pacific region could increasingly put a strain on society and government finances, particularly through rising health-care costs.
However, financing elderly health care is not the only area where a rapidly aging population will have significant impact on society. Another would be on social pensions and everything else related to how individuals, families or governments invest money so that the elderly will live comfortably and with dignity during their retirement.
Filipino families usually have their grandparents live in the same household, instead of shipping them out to nursing homes. And it is common practice that the extended family continues to play a significant role in securing an elderly person’s retirement.
A 2015 Global Aging Institute and Pru Life UK survey affirms this, finding that in the Philippines over 70 percent of retirees aged 60 and above live with their grown children and that up to two-fifths (40 percent) of today’s retirees are dependent on them.
The survey further found that up to 60 percent of Filipino respondents answered that grown children and other family members should be mostly responsible for providing personal care to retired people.
In this regard, it appears that the Philippines (with Vietnam) is going against the trend among the 10 East Asian countries surveyed, which include Thailand, Hong Kong, Malaysia, South Korea, Taiwan, Indonesia, Singapore and China. Overwhelming majorities in these other countries were found to reject the traditional model of family-centered retirement security.
However, only 10 percent of today’s workers in the Philippines expect that when they retire, they will be dependent on their children or become so-called net recipients of their children’s incomes.
The survey’s findings point to the double financial burden imposed on those who earn today—the pressure to care for their elderly loved ones and the pressure to have enough stashed away for one’s own retirement in the future.
This burden was, in part, what I sought to help alleviate in pushing for the Senior Citizens Act and the seniors’ discounts and social benefits it prescribed. But it appears many other factors are exacerbating the problem.
One is the fact that over half of senior citizens in the Philippines do not receive any kind of pension at all, as estimated by the Council of Services for the Elderly. And the very few who do, receive very little.
For instance, according to the 2015 HelpAge International Social Pensions Database, the social pension (a direct cash transfer of P500 a month, or around $12) in the Philippines introduced in 2011 for indigent senior citizens—but only for those 77 years old and above—is only 5 percent of our 2012 GDP per capita.
In contrast, a similar pension scheme in Indonesia—available to senior citizens at 70 years old (60 if chronically ill) at around $27—is 9 percent and 10 percent in Malaysia (at around $94 also for 60-year-olds).
Ongoing discussions on raising the minimum Social Security System (SSS) monthly pension from P1,200 to P2,000 have put the spotlight on key issues regarding the management of the SSS—including the failure to collect millions, if not billions, of unpaid contributions.
Meanwhile, there have been reported huge backlogs in the payment of military pensions—which in 2015, amounted to around P18 billion accumulated since 2000 for up to 123,471 military pensioners.
The other factor adding to the double burden is poor financial literacy and a high “unbanked” rate among Filipinos. According to the latest data from the Bangko Sentral ng Pilipinas (BSP), only 3 out of 10 Filipino adults have an account in a formal financial institution. More than 6 out of 10 (65 percent) of those people said that not having enough money was the reason they did not have a bank account.
Although a little more than 4 out of 10 (43.2 percent) Filipinos save for a rainy day, nearly 7 out of 10 (68.3 percent) of those people keep their savings at home, hidden in bedroom closets or kitchen shelves—unsecured places that do not earn any money for the saver. Up to 2 out of 10 Filipinos, in fact, have never saved a penny in their life.
Contrast these with the finding of the mentioned 2015 Global Aging Institute and Pru Life UK survey that up to 66 percent of Filipino respondents expect government to be mostly responsible for providing income to retired people versus only 10 percent who said it should be the retirees themselves.
All these highlight the very urgent need to revisit and reform the country’s overall pension system, especially when studies project that our senior population will balloon to 12 million by 2025, from only 6.2 million in 2010.
E-mail: angara.ed@gmail.com.