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ASC
Philippines, the local unit of Guam-based retirement
planning consultancy ASC Trust Corp., will be expanding
its services to its Philippines’ and the latter’s
US-based clients, according to company officials.
In an
interview with the BusinessMirror, David J. John,
president of ASC Trust, said the Philippine office will
be introducing a “401(K)-type” of retirement-pension
setup for its clients, piggybacking on its partner,
Metrobank’s unit investment trust fund (UITF) program.
He added
that ASC Philippines is also working with Metrobank to
get the Bangko Sentral ng Pilipinas (BSP) to approve the
former as an outsourcing agent. This will enable
Metrobank to outsource the individual processing and
ledger maintenance of clients’ funds to ASC’s local
unit.
Similarly, ASC Philippines is also looking to be a
third-party service provider for the parent firm’s
clients in the US covering some 10,000 participant
programs.
Karen
Mae C. Ching, general manager of ASC Philippines,
explained that her company’s new retirement plan, dubbed
as Provident Plus, calls for employees to put in an
additional contribution to their current retirement
plans, which will be matched by their employees. That
additional portion, she said, can be invested in
Metrobank’s UITFs, which cover 10 different asset
classes— ranging from stocks, bonds, peso or US dollar
fixed-income securities—depending on the risk appetite
of the investor.
A UITF
is a collective investment scheme that pools the
investments of small investors into a larger fund
managed by the trust department of banks. Because the
funds are larger, participants have more access to
investment opportunities that may yield higher returns
than those tools available for small individual retail
players. The investors share in the gains or losses of
the fund, proportionate to their respective
participation in the pool expressed in terms of “units.”
Under
the UITF, the concept of net asset value per unit is
utilized to value the participation of the investor’s
investments. The investor makes money from the sale of
the units back to the issuing bank. Although it is a
bank product, UITFs are not insured, though, by the
government, such that if the fund’s value drops, and
investors want to withdraw their monies, their losses
will not be reimbursed by the Philippine Deposit
Insurance Corp., like the latter does for deposit
accounts.
“Using
the UITF investment platform, we sync it with the
age-weighted profile [of our clients]. So the employees’
contribution is being invested according to their age
and risk appetite. For example, those employees between
21 and 30 years old can go to the aggressive
investments, such as the UITF [with underlying assets]
in stocks. Moving forward, as they grow older, they
should be in a less aggressive plan, perhaps a UITF for
fixed-income government securities,” she said.
Under
Provident Plus, the employee can increase his usual
contributions to his retirement plan by, say, 2 percent
and the employer matches it by raising his contribution
to 6 percent, from the 4 percent normally required by
the government. The additional contribution of the
employee is deducted from his salary, so he doesn’t have
difficulty setting aside funds for this retirement plan.
Using ASC’s web site, investors will be able to see
their UITF’s net asset value on a daily basis. “If the
employee resigns from the company, he will get his
income and earnings from the Provident Plus,” Ching
said.
John
added that the program can be offered by employers as an
additional benefit to their employees, which may prevent
a fast turnover of staff. “Ten years ago, you wanted to
have a job and just stay there. But today’s workers are
moving around like crazy, right? So if we tell the
workers they have a retirement plan that they’ll have
ownership in it in 10 years, what’s the value of that
when they know they will be at their job for only two to
four years? So it means nothing to them. But if you can
take a program and create a base pension obligation [in
compliance with the government mandatory retirement
program]…then take some of your freed-up money and
encourage your employees to save but have a shorter
investment schedule and use that portion for the UITF,
you tell your employee: ‘Stay with us for four years and
we’ll give you a match for your money,’ now you get the
employees putting their own money, and they stay with
you for four years. They’ll be family by then.”
Ching
said the retirement plan has already been presented to
the investment committee of the Catholic Educational
Association of the Philippines (CEAP) an organization of
Catholic schools in the country with about 1,194
members, which include 30 universities, 101 graduate
schools, 240 colleges, 1,070 high schools, 592
elementary and 596 preelementary schools. She said the
response from CEAP—which is also its client for
ledger-maintenance activities through Metrobank—has been
positive.
“We’re
also targeting its member-schools individually, such as
institutions like De La Salle University, Ateneo, Miriam
College, etc., because they have larger employer
contributions. SGS, which is a client on Guam, also
approached us locally [to do this plan for them].” Using
ASC’s computer software, the company can easily do the
age-profiling for its clients.
By
November, Ching said ASC Philippines hopes to secure its
license from the BSP to be a “third-party service
provider” for Metrobank. When approved, ASC Philippines’
ledger- maintenance services will be part and parcel of
Metrobank’s service to its trust clients. Under the
present set-up, clients of Metrobank sign a separate
contract with ASC Philippines for the latter’s services.
“This is an exclusive arrangement with Metrobank. We
started talking to the BSP in September and expect an
approval by November.”
John
also said ASC Trust is now working with some fund
providers in the US for a possible arrangement, wherein
the local unit will do outsourcing work for said
clients. “The companies are like ASC Trust but they’re
in the States. It’s kind of like a call-center
approach…we want to make it simple for all the clients
to export information but we run all the stuff here and
actually do the [processing] work…so the companies in
the States can focus on what they do best, educate the
employees and work on the investment end of the
operation. We’re doing their backroom administration
here,” he explained. He declined to reveal the companies
which ASC Philippines will be serving in this manner
pending negotiations.
Ching
said the outsourcing platform covers processing, trust
administration, order contribution transactions,
withdrawals or distributions, management reporting on a
monthly or quarterly basis. “We can print out [the
statements] here and send these anywhere in the world.
Through our web site, they can access their fund’s
database here.”
Their
first client for the outsourcing program is the
Seventh-Day Adventist Church, whose regional
headquarters is located in
Cavite, south of
Manila.
“We print their statements here, which is 40-percent
cheaper than when done abroad. We’re trying to move in
their dollar-investment platform to the Philippines, so
we’re tying to come up with an access system for
Guam, which
administers and trades their funds. Since its regional
office is in Cavite, it is easier for them to transact
with us than Guam,” Ching said.
ASC
Philippines provides ledger- maintenance support to some
P1.5 billion in retirement funds of four organizations—CEAP,
Metrobank Provident Fund, Angeles City University and
Angeles University Medical Center. Ching said her
company hopes to land the accounts of two multinational
companies and a hospital group by next year. |
