The Bank of the Philippine Islands (BPI) anticipates making lucrative business out of pension products as the average age of Filipinos pushes higher and retirement among the working population recedes further down the line.
Mario Miranda, BPI senior vice president and trust officer at BPI Asset Management, said with more people advancing in age than ever before, and advancement in medical sciences helping prolong life expectancy, voluntary retirement contributions play a crucial role in securing life after employment.
With life expectancy projected to increase to 79 years of age by 2050, and a growing population of Filipinos that are entering retirement age, the social and financial burdens that retirement often brings will significantly strain government and social services.
“In traditional Filipino culture, the family was, to some extent, the ‘pension system.’ But with urbanization, more and more people realize that their children leave the house and establish their own families. Consequently, a sexagenarian woman wished that she should have started investing in pension plans when she was younger [except that] nobody discussed it with her,” Miranda said.
“To be honest, retirement planning for me only started a few years ago and now I’m three years away from retirement,” said Carmen Sison, 61, a US-based Filipina working in the furniture industry.
Compared with what is happening in more developed nations, retirement planning sticks out as a major concern in the Philippines.
“My retirement funds consist of a little bit of pension, but mostly supplemented by my children. If it weren’t for my kids, I don’t know how I would be able to live on the amount I receive,” said Maria Manese, a 74-year-old retiree living in Manila.
The Personal Equity and Retirement (Pera), a tax-exempt retirement planning instrument for Filipinos, is a painless way to start and finance every Filipino’s retirement.
BPI said the Pera is a way to address the prevailing challenges in retirement planning and positioned to serve as a staple product for every working Filipino to diversify and complement their existing investment portfolios.
Enacted into law in 2008, the Pera allows for maximum yearly contributions of P100,000 and P200,000 for overseas Filipinos.
As the first financial institution to be accredited by the Bangko Sentral ng Pilipinas to administer the Pera, BPI aims to market the product to both individuals and corporations. A Pera account is available to anyone who has a tax identification number, the lender said.