P.E.S.O. - FUND; AN SSS ANNOUNCEMENT

SSS announced today the launching of its Personal Equity and Savings Option (PESO) -fund.  It is similar to the OFW's flexi-fund, with similar provisions.

It is voluntary, and is open to members who are below 55 and are paying the maximum contribution for SSS for SEVMs and OFWs. Employed members may join even if they are not at the maximum levels.

Benefits  and Income are tax-free because this is earmarked for a retirement fund.  CONTRIBUTIONS to the fund are NOT tax-free, unlike the PERA fund discussed a few years, but never flew.

Income is guaranteed because it is pegged to the T-bill rate, same as the flexi-fund.

Details will follow at a later post.
If readers will remember, Pag-ibig also announced a similar, if smaller program that may appeal to the smaller-income would-be investor.  The Pag-ibig offer is also less restrictive.  However, I have yet to compare possible incomes and growth of fund.

A comparative post of the Flexi-fund, P.E.S.O. - Fund, Pag-ibig, and  PERA fund will follow at a later date.

If you read about it, and have questions. You can ask on this post.

NOTE:  RIGHT NOW I AM SEEING CERTAIN DISCREPANCIES IN THEIR ANNOUNCEMENT.  HENCE, I AM GIVING TIME TO CHANGE CERTAIN ITEMS BEFORE I START THE DISCUSSION.

A little thought about the PERA

i mentioned this in the short post about the SSS announcement of a supplementary savings option.
i urge everyone who is qualified to participate.  however, in the interest of fairness, this is something about PERA and here is the link for a lawyer's take on it. 

Click here for the jlp-law.com "a primer-on-the-personal-equity-and-retirement-account-pera-act"


remember one of the salient differences is the tax break on the PERA account.  Still, if the SSS optional savings account is declared a PERA vehicle - and i dont know about the chances of that happening, it will have all the PERA features.  as it is now, it has most of the features already.

SSS will establish a provident fund this year

SSS will establish a Provident Fund this 2013 for all members aged below 55, with a maximum SSS contribution of 1,560 under the present situation (15,000 is the current maximum MSC, with a rate of 104 pesos/1000 MSC.  If the SSS proposal gets approved, this will change to Maximum MSC 20,000, with 110/1000).  

Maximum contribution to the Provident Fund is 100,000 per year, with a minimum contribution of 1,000 per year, and payments can increase/decrease in multiples of 100.  Payments to the Provident Fund, like the OFW Flexifund must be over and above the maximum contribution to the SSS. 

The funds will be earmarked as 65% for retirement, 25% for medical, and 10% personal.  Withdrawals within the 5-year retention period will be subject to charges and penalties.  why, you ask? because it defeats the purpose.

Interest will be computed on this basis:

retirement and disability portion (65%) - guaranteed earnings based on the 5-year Treasury bond rate

the remaining 35% will be guaranteed earnings based on the 364-day Treasury bill rate

Retirees may opt to withdraw the savings in full or as a monthly pension.

This will work similarly to the PERA (Personal Equity and Retirement Account), only SSS Style. As you can see limitations are similar, although SSS cannot make the promise of tax benefits - only the Government can do that.

well, i recommend that non-financial savvy persons got for this.  Actually, even if you are financially savvy, it would be nice to have something like this that does not require constant monitoring - makes for a less stressful life.

remember, climate change is real and you need real savings for the future.  why climate change? you may need upgrades to your home because of environmental changes by the time you are retired so this might be a little (emphasis on the little) nest egg you can use.

It's Friday, so reaction to HTTemplo's Playing Santa Claus column

first of all, HTT's post invariably contains SSS history so reading it is a good way to get historical data about the SSS unless you - as a reader - are one of those - who are steeped in history.  i would say that legislators should know about the SSS history themselves (or as some politician would put, as least his aides should)  because SSS matters are of national importance. 

what can i say?  i agree.  in fact, readers may remember i said that 20K increase mentioned in the SSS reform agenda is too small.  i said then that it should be at 50K, or at the very least 30K.  But, they chose to limit it at 20K.

will PNoy play Santa then?  i guess.  perhaps history will dictate it

let me just repeat his last statement

Thus, it should do no less for its primary program-pensions. Election year or not, it should push for increases in pensions, maximum salary credit and contribution rate. This Christmas, it is the turn of President Noynoy Aquino to play Santa Claus to us current and future pensioners by approving them.

click here to read HTTemplo's column playing-santa-claus

Reaction - and Agreement to HTTemplo's column last Friday

Click here for HTTemplo's column last Friday, 26 Oct 2012

i agree. as i was discussing in an old post, not all private sector employees are financially savvy and everyone needs help with arranging their retirement.

so high time for some political entity to do something about this.  do you know that some government retirees receive as much as over 100K in pension? and his poor equivalent in the private sector might have a maximum of 10K.  what an inequity!  time for this to stop.

of course, private sector employees have such things as golden parachutes and stock incentives and other lucrative benefits.  i cant detail because my friends will know that i am talking about them....

so, i thought PERA was the government's way of starting to change the inequity. but PERA seems dead.
as a doorknob.  maybe a requiem is now in order?

On today's column of HT Templo- on Public Pension Funds

Click here for HTT's post on public pension funds

i asked him when he would discuss PERA, but he said this would be some time from now.

 This particular paragraph caught me.

More than 4 million senior citizens do not receive any pension. For the account of the tax-paying public, Congress can easily increase the P1.2 billion social pension budget to P12 billion to benefit 2 million senior citizens. Double that to P24 billion and we suddenly have a pension-for-all program, making DSWD the biggest public pension fund administrator in terms of number of beneficiaries.

All you have to do to test this statement is to look around.  There are so many people living without. 
Alas, the cost bothers me though.  i feel i am already taxed beyond endurance. gross taxation is evil, and if the burden of tax is increased to provide a universal pension.  then i am sure the middle class will disappear into the poverty class.

On HT Templo's "are you not a pensioner" - Manila Standard

last week, i promised to discuss issues raised by HTT on social security issues.

in this issue, he discusses the original intent behind the SSS Law, the history behind the development of the different, fragmented pension scheme - that is, the SSS, the GSIS, the military, etc.

 i happen to agree that any individual should be able to contribute to the SSS as a voluntary member at the very least.  the methodology by which individuals can begin to contribute should be easy.  As easy as showing an authentic birth certificate and starting to pay.  it shouldnt matter what his job is, or how he is getting the income to pay the where-withall, as long as he pays.

how else can people, with no formal jobs (say plumbers, or carpenters), no formal associations (like CPAs). become members so that they can have pensions in  their retirement?

why SSS? well, by-and-large, people need someone to handle their financial affairs for the future.  So why not SSS?

for the slightly more financial-savvy, there's always the simple PERA (Personal Equity Retirement Account).  although i dont hear/read about its implementation anymore.  i did suggest that SSS be one of the vehicles by which this be implemented (see post with PERA label) because it would be much easier for a large number of Pinoys.

Debate with me.  comment.

Click here for the pension discussion of Horace T. Templo

Savings - Flexi-fund for OFWs. Paying SSS contributions

i am reminded of savings because of the saying "pennies for a rainy day"

and Manila has certainly had its share of rainy days these days

i am one of those individuals who remove coins from the purse to reduce its weight.  i put them in a container and sort them when i have time, and when i have filled several bags of different coins, i usually deposit them to my MetroBank account.  why metrobank? i dunno. just a habit. i deposit my coins there.  and they - the bank staff - are nice too.

a few posts back i said everyone should try to save - for a rainy day.  for money in the future.

paying your SSS contributions is one of them, as this is saving for your retirement.  i call paying your SSS forced savings - and i hope you do try to pay the maximum.  remember the pension is only about 40% of the MSC (Monthly Salary Credit.

if you are an OFW, i suggest you avail of the SSS flexi-fund.   view it as another channel for forced savings.  and well, you have to pay the maximum to qualify for paying the SSS-flexifund.  But the flexi-funds are, more-or-less, under your control, subject to restrictions.  On the left is the article from the Manila Bulletin.


we Filipinos love to spend, sometimes, i think,  rightly because cost of money rises unduly and our purchasing power can decrease with time.  this is why i advocate forced savings.

also, money on hand is the easiest thing to spend so put your money a little out of your hot hands.  i try to do this.  i am a collector, remember, and collectors are slightly weird.  friends will argue that i am officially weird because i am from Sayans, and i come not only from the weirdest batch, but the weirdest section by award in the weirdest batch.  *sigh*

one another thing that should now be in force and i want SSS to involve itself in is the PERA "mandate".   this is the link for more details personal-equity-and-retirement-account-pera-act law office blog
why do i want sss to be involved?  just for simplicity. one payment, 3 things to pay, 3 different financial instruments.  otherwise, it will probably be banks that will handle this.

well, regular people can avail of the PERA but only OFWs qualify to invest in the Flexi-fund.  one of the reasons i also want SSS to handle PERA.  PERA is not subject to SSS law, nor is the Flexifund so that gives the client/investor more options, albeit restricted.  if it werent restricted, it wouldnt be out of hot hands.

more financially savvy ofws would put their monies in other instruments such those that take advantage of foreign currency exchange rates, or do stock/commodities trading.  if you are that savvy, the returns are better for those.  but those who want a simple life may just do PERA or Flexifunds, or the usual time-interest instruments.

i really recommend Flexi-funds for those who do want a simple life, with better interest than that offered by banks.  and also, try not to get your money out of your Flexi-fund accounts when you are back in Manila.  let it ride there.  i also encourage you to check the growth of your money.  visit your account!

here is the form to register as an OFW

instructions for the form

note:  if the form is back-to-back, you must also print it back-to-back.

Click for the Editable (or fill-in form) OW-1

Click for downable OW-1 form

Click here for the downloadable Flexi-fund form

If you want to see the rest of the SSS forms - Click here to view/download the rest of the SSS forms