Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Tuesday 80% of senior citizens in the country have no pension or retirement fund.
“Based on the latest report of the Philippine Statistics Authority, the Philippines has around 7.6 million Filipinos aged 60 years old and above,” Diokno said during the virtual launch of the digital Personal Equity Retirement Account (PERA), an investment tool for retirement.
“Of this group, only 20% are covered by either SSS (Social Security System) or GSIS (Government Service Insurance System), leaving 80% of senior citizens with no mandatory pension at all,” he added.
Dioknes said fortunate retirees receive an average monthly pension of P5,123 for SSS and P18,525 for GSIS, which are state-sponsored retirement systems.
“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.
The Republic Act No. 9505 or the PERA law was imposed to address the issue of the majority of senior citizens not having pension or retirement funds.
The BSP first launched PERA in 2016, but its implementation was related due to tax and regulations issues.
“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.
80% of senior citizens have no pension or retirement fund – Diokno
“In terms of expectation, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income would be enough for retirement,” he said.
“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.
Retirement and survivorship pensions, sickness, disability, death, and other related allowances or benefits are included in the security benefits.
“As such, voluntary retirement savings plans such as PERA are crucial in supplementing the state-based pension plans to meet retirement needs,” Diokno said.
PERA, unlike existing corporate or national pension systems, does not require salary deduction to accumulate funds.
An individual could invest up to P100,000 every year to prepare for his or her retirement, the BSP said.