MANILA, Philippines – The Social Security System (SSS) said its provident fund for overseas Filipino workers has much more room for growth as only two in every five OFWs set aside money for investments and savings.
Citing the Philippine Statistics Authority (PSA)’s 2013 survey on overseas Filipinos, SSS senior vice president and international operations division head Judy Frances A. See said only 40.7 percent of 1.9 million OFWs had savings from cash remittances. This was 2.2 percent lower than the 2012 figure.
Given this, See urged OFWs registered with the state pension fund to invest in its Flexi-Fund program, a provident fund type of retirement plan offered exclusively to OFW members.
Under the program, an OFW member could contribute at least P550 based on the P5,000 minimum monthly salary credit (MSC) for OFWs to a maximum of P1,760 per month based on the maximum MSC of P16,000.
“Saving should be a priority because once they come back home and their income stops, they would likely have to live off whatever amount they have set aside. It is, therefore, important that they accumulate funds for a reserve, such as their SSS savings to mitigate loss of income.” See said.
SSS savings would redound to their benefit in the form of payments for contingencies such as sickness, maternity, disability, retirement and death, she said.
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“For only a minimum of P200 paid in excess of the maximum contribution, it already enables an OFW member to save and build up funds that can be used upon retirement to supplement the benefits available under the regular SSS program. Early withdrawal of funds is also allowed in case of urgent cash needs,” See pointed out.
Around 39,274 OFW members of the Flexi-fund program earned P431 million. A paying OFW member has an average Flexi-Fund investment of P10,974.
Money put in the Flexi-Fund are invested in fixed-income government securities that are risk-free. Interest earnings are guaranteed, as computed based on the average rate of SSS’ short-term peso placements or 91-day Treasury bills, whichever is higher.
The SSS estimates Flexi-Fund investments to grow at an average guaranteed interest rate of 1.3 percent this year while Flexi-Fund accounts with annual incentive benefits (AIB) will have a total yield of 3.9 percent.
“With Flexi-Fund, OFW members can maximize the return on their savings despite the prevailing low-interest environment. Those who will retain their savings intact within the year will be automatically entitled to annual incentive benefits in the form of additional earnings credited to their Flexi-Fund accounts,” See said.
Last year, Flexi-Fund accounts earned a total of P16.4 million at a guaranteed interest rate averaging 2.7 percent. Total earnings comprised P7.24 million in AIB and P9.16 million in guaranteed earnings.
Flexi-Fund accounts with AIB had a total yield of 4.2 percent in 2013.
The highest AIB credited to a member’s Flexi-Fund account was P57,098.
“We hope that we can inculcate the saving habit among our members through our regular program and alternative saving options such as the SSS Flexi-Fund,” See said.