The Philippines ranked as the second worst country in terms of pensions system, 43rd out of the 44 countries evaluated in the 14th annual Mercer CFA Institute Global Pension Index which measures retirement funds based on adequacy, sustainability and integrity.
The country also received a “D” grade which means that the system has some desirable features but also “major weaknesses” that need to be addressed, Mercer Asia Wealth Business Leader Janet Li said.
The study gave the Philippines a total score of 42.0 based on its rating on adequacy, sustainability and integrity, which were at 40.5, 52.3 and 30, respectively. It was also noted that the Philippines embarrassing score in integrity is the lowest earned globally.
“For integrity, which considers three broad areas of the pensions system, namely regulation and governance, protection and communication for members, and operating costs, HongKong SAR had the highest value (87.6) with the Philippines’ retirement income system scoring the lowest (30.0) in Asia ang globally,” the study said.
Li gave some areas for improvement for the Philippines, such as increasing the minimum level of support for the poorest ages individual; increasing coverage of employees in occupational pensions schemes, thereby increasing the level of contributions and assets; setting aside funds in the public system for the future, thereby reducing reliance on the pay-as-you-go system;
Introducing non-cash-out options for retirement plan proceeds to be preserved for retirement purposes; and improving the governance requirements for the private pension system.
As life expectancies increase globally due to advances in medicine and technology, pension funds are becoming ever more important. This is something that the people of a country that is stuck with one that is rated as among the worst will have to keep in mind as they age. While Filipinos have been counting on government to do what it takes to make it better, if not in the short term, then for the long term, it is starting to look like we may have to start looking after our future selves a bit more by ensuring our own plans for retirement and pension, as having a little extra won’t hurt, especially if the ones we thought we could depend on fail to deliver.*