By Corina Oliquino i FilAm Star Correspondent

MANILA – Manufacturers Life Insurance Corporation’s (Manulife) 2018 Investor Sentiment Index (MISI) revealed older Filipinos only set aside an average of 3.6 months’ worth of personal saving for retirement, the lowest among eight Asian countries including Hong Kong, China, Taiwan, Singapore, Malaysia and Indonesia.

Taiwan has the highest retirement savings, which is equivalent to 4.5 years, while average Asian investors have enough retirement savings for up to 2.9 years.

In a report by The Philippine Star, Manulife Philippines’ vice-president and chief marketing officer said the problem stems from the “belief that their family members would support them during retirement.”

“I think at the heart of this is really, as a culture, we’re very family-oriented, which is a good thing and our strength as a Filipino. But what we found in our survey called ‘Aging Asia’ that we did three years ago, was that the Philippines actually ranked the highest in terms of expectation that a family member will help support a family member during his or her retirement,” Melissa Henson said, noting another MISI survey in 2019 which revealed that “even some millennials expect to receive support from their children or aging parents when they retire.”

Henson noted that the “financial expectation” has resulted in a wide gap between Filipino’s current and ideal retirement savings, averaging at over PHP 4 million across all age groups.

According to the survey, Filipinos also believe that savings equivalent to 2.1 years’ worth of personal income would be enough for retirement, the lowest expectation in the region.

“Assuming you will retire at 60, the average life expectancy in the Philippines is close to 70 years old. So that’s at least 10 years of life expectancy beyond retirement. That’s the minimum that we should save for,” Henson said, noting 84 percent of working Pinoys asked in the survey “are looking to continue working either full-time or part-time after retirement to keep them busy, maintain their mental and physical health and to pursue other interests and to enjoy life.”

Meanwhile, 59 percent of the respondents said they expect to work beyond retirement due to financial issues, such as maintaining their living standards.

The survey also noted a strong interest for those 50 years old and above to pursue digital work, with the Philippines ranking third among eight Asian countries with investors working in digital jobs.

Moreover, Henson is urging Filipinos to learn how to save and invest as preparation for retirement.

“Digital transformation provides more job opportunities, flexibility, and options for Filipinos to bridge the retirement savings gap. However, Filipinos should still save and invest regularly to prepare for retirement,” Henson said.

SSS to raise pension by second quarter of 2019
In another report by the Philippine Information Agency, state-run Social Security System (SSS) said the implementation this month of Social Security Act of 2018 will see increase savings rate for higher retirement benefits.

Under the new law, contribution rates will rise by up to 12 percent (up from the current 11 percent) adjusting the minimum and maximum Monthly Salary Credits (MSC) to PHP 2,000 and PHP 20,000 respectively.

“We all want a comfortable retirement and to do that, those who are in their productive years must work hard to save more. SSS is the cheapest and most accessible pension scheme. All workers, regardless of nature of employment, must save in the pension fund for their future retirement years,” SSS officer-in-charge Aurora Ignacio said, noting it will help members to save more for their retirement.

“The good news is that those who will save more with SSS under the new maximum Monthly Salary Credit of PHP 20,000 will have higher amount of benefits and loan privileges as the MSC is one of the main factors used in the computation of benefits and loan privileges. For example, a member whose monthly salary is PHP 20,000 and has paid 12 contributions in the 12-month period before the semester of contingency of sickness will enjoy PHP 600 in sickness benefit per day from the current PHP 480 per day,” Ignacio added.

The law is also expected to generate an additional PHP 31 billion for the pension fund as it will impose a gradual increase of monthly contributions and 15 percent hikes to 2025.

“The current personal monthly contribution of PHP 363.30 will increase by PHP 36.70 to PHP 400 while, the employer will now pay PHP 800, an increase of PHP 63.30 from the current PHP 736.70 employer-share,” the report reads.

The adjustment will see a member who paid the minimum 120 contributions on the old maximum MSC of PHP 16,000 get a monthly basic pension of PHP 6,400.

The law will also add 13 more years to the fund life of the SSS until 2045.

“We hope that our members will understand the importance of adjusting contributions to make sure that the pension fund remain strong and viable for the current and forthcoming generations,” Ignacio said.