By John Clifford Lintao
EIGHT of 10 elders in the country are deprived of the meager pensions or retirement funds due to senior citizens, said Bangko Sentral ng Pilipinas Governor Benjamin Diokno, citing Philippine Statistics Authority’s most recent report.
“Based on the latest report of the Philippine Statistics Authority, the Philippines has around 7.6 million Filipinos aged 60 years old and above,” said Diokno at the virtual launch of the digital Personal Equity Retirement Account (PERA), an investment tool for retirement.
“Of this group, only 20 percent are covered by either SSS (Social Security System) or GSIS (Government Service Insurance System), leaving 80 percent of senior citizens with no mandatory pension at all,” he added.
Retirees, who are fortunate enougSh to be covered by state-sponsored retirement systems, receive an average monthly pension of P5,123 for SSS and P18,525 for GSIS, Diokno added.
“Depending on the lifestyle you would like to have in your senior years, this pension may or may not be enough to meet all your needs,” Diokno said.
To address the issue of majority of Filipino lacking pension or retirement fund, Republic Act No. 9505 or the PERA law was enacted to provide tax benefits while instilling the discipline of saving money by making annual contributions to their own account.
However, its implementation was delayed due to taxation and regulatory issues. The BSP first launched PERA in 2016.
The investment tool still was underutilized, according to Diokno. Thus, the creation of a digital platform to entice younger generations and bring it closer to Filipinos.
“According to a recent survey, we Filipinos tend not to prepare for their own retirement. Specifically, Filipinos only set aside 3.6 months’ worth of income for retirement — way below the regional average of 2.9 years,” the BSP chief said.
“In terms of expectation, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income would be enough for retirement,” he said, adding this is the lowest expectation in Asia compared with the regional average of 12 years.
“PSA reported that the share of social security benefits to Gross Domestic Product also remained relatively low at around 2.0% from 2012 to 2017,” Diokno said.
Security benefits include retirement and survivorship pensions, sickness, disability, death, and other related allowances or benefits.
“As such, voluntary retirement savings plans such as PERA are crucial in supplementing the state-based pension plans to meet retirement needs,” the BSP chief said.
Unlike existing national or corporate pension schemes, PERA does not require a deduction from one’s salary to accumulate funds.
The new investment tool relies on an individual’s decision to invest up to P100,000 annually to prepare for retirement, according to the BSP.
The PERA law allows individuals to open up to five PERA accounts and these can be invested in specific PERA-accredited product lines.
Overseas Filipino workers are provided the additional benefit of being able to invest up to P200,000 annually which is twice the normal limit.
“We at the BSP support the twin objectives of PERA, which are: first, complementing existing pension and retirement benefits, and second, promoting capital market development,” Diokno said.