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Philippine pension system 2nd worst in SE Asia
MANILA, Philippines — The Philippines has the second worst pension system in Southeast Asia, a global survey showed.
According to Mercer’s Global Pension Index 2021, the Philippines ranks among one of the worst countries in terms of giving out retirement incomes, together with Japan, Mexico, South Korea, Turkey, India, Argentina and Thailand.
On a scale of 1 to 100 – with 100 being the highest – the Philippines scored 42.7 this year, down from 43 last year and still below the global average of 61.
The Philippines only performed above standards in pension sustainability with a rating of 52.5 against the standard 50.9. However, adequacy only fared 38.9 against the global 62.3, while integrity crashed to 35 against the average 71.8.
“A system that has some desirable features, but also has major weaknesses and omissions that need to be addressed. Without these improvements, its efficacy and sustainability are in doubt,” Mercer said, describing the pension system in the Philippines and its similar rated nations.
In Southeast Asia, Thailand sustained the worst score of 40.6, as Singapore’s 70.7, Malaysia’s 59.6 and Indonesia’s 50.4 all exceeded the Philippine rating.
According to Mercer, the Philippines can improve its pension system by increasing the minimum level of support for the poorest aged individuals.
Also, the government should expand the coverage of workers in occupational pension schemes to beef up the social fund’s assets and premiums.
Mercer also said the government should direct public funds to the Social Security System (SSS) to reduce its dependence on the pay as you go system. Last year SSS obtained its highest ever subsidy of P51 billion, as it initiated programs to cover for wage losses suffered by its members during the pandemic.
Likewise, Mercer said SSS should introduce non-cash out options for retirement plan proceeds that can be used upon exit from work. The New York-based asset manager also suggested that governance requirements in the SSS be overhauled.
“The Philippines index value decreased slightly from 43 in 2020 to 42.7 in 2021, primarily due to a fall in the real economic growth rate,” Mercer said.
Nordic countries Iceland and Denmark, as well as European nation Netherlands, topped the yearly index with scores above 80, wherein their pension systems deliver complete benefits, are sustainable and have integrity.
Source: https://www.philstar.com/business/2021/10/21/2135501/philippine-pension-system-2nd-worst-se-asia