Pretty Money - Hungarian Euro?

Seen such pretty money

take a look

d'you think it will encourage savings? or expenditures?

Goodreads quote

Life is not so idiotically mathematical that only the big eat the small; it is just as common for a bee to kill a lion or at least to drive it mad.


August Strindberg
The Swedish dramatist was born on this day in 1849.

a reminder to all those big 'uns.
you are not so big that you cannot be toppled
you are not so powerful that you cannot be deposed
you are not so rich that you cannot be reached

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.

Time to lose US dollars?

well, a few friends say it is time to change my dollars into other currencies.
i am waiting for word from one more guy before i divest.........

but if true, our OFWs will automatically get a decrease in pay.
i hope their relatives are aware and tone down Christmas expectations.......

we are heading for tough times, and i hate the fact that the BIR is offering no breaks for anyone
not even those who are sick and are having a tough time meeting their medicine requirements
and those disabled?  what benefits does BIR offer?

i try and try to reach their website but whoever is manning them is doing a not-so-good job
always unavailable. 

The SSS Reform Agenda

Below is the SSS Proposal in its Reform Agenda To increase the rate of contribution from 10.4% to 11% or a 0.6% increase to be shared equally by the employer and employee; and to raise the maximum salary ceiling from P15,000 to P20,000  it is very simple.  SSS cannot afford to increase pensions if there is no increase in contribution rates.  If it attempts to do so, the life of the fund decreases and when the life of the fund decreases, this means that there will come a time pensioners cannot receive any pensions. i dont think anyone wants that.  do you? i ask relatives and pensioner friends what they would rather have - a short period with a high pension, or a pension for life?  invariably, they choose for life.  so.  want higher pensions?  well, there is only one way to do it.  the contribution rate must be increased. people say that SSS can be more efficient collecting contributions. of course. but this is not the topic of this post.  the maximum salary ceiling is still low.  face it. middle managers, at the very least get more than that. some of my friends laugh at this maximum - a quick and dirty calculation of the expected pension is 40% of the MSC (will post separately on how to compute your pension).  so, if you are paying the maximum, it would be about 40% of 15000, or about 6000.  the pension is adjusted upwards if you have paid for more than 10 years.  Still, what is 6000?  peanuts, my friend says.  to be fair, he is on the high-end of the earning spectrum.  still, 6k is 6k and is better than zero.  this is the reason i encourage ofws and other vms (voluntary members) to pay the maximum amount. still, i agree. what can 6000 buy you in your retirement age.  this translates to 200 pesos/day.  can you live on that? if i had my druthers, i would suggest that the highest MSC be in the 50K range.  But that would probably shock the system too much, so an intermediate step of 30K sounds better to me than 20K. this is a personal opinion, although it is also backed by an actuarial study done sometime 2010. also, anytime SSS increases its MSC, there is a corresponding adjustment in the pension formula.  with the SSS proposal, SSS has already done its actuarial homework, and have an adjustment in the pension formula. and it is a fair adjustment.  as a note, GSIS does not have any such maximum MSC.  that has its advantages and disadvantages.  personally and mathematically, i would prefer a maximum limit, but i wish this limit to be high.  the current SSS maximum of 15K is definitely too low. still, the SSS proposal has merit and hopefully it will be approved. businessmen say that the 3% increase is tough.  the other 3% is from the employee. sure.  doing the right thing is always tough. as they say in physics - entropy is the natural state.  or quite simply - chaos. it takes energy to maintain order.

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