In a recent conversation with a former dormmate at Silliman, he told me that most retirees from the private sector are now suffering from AIDS. As a retiree from the private sector, AIDS to him is acute income deficiency syndrome. He said “I retired as a Senior Assistant Vice President for the Visayas from one of the top private banks in the Philippines and yet I am receiving a monthly pension of only P11,000.00.” While executives in government were only receiving a five-digit monthly salary about ten years ago, he was already enjoying more than a hundred thousand, plus all the perks which the government could not match. I can just imagine the adjustment in his lifestyle after he retired. He never talked about it in public.
Actually, there are five retirement challenges that are seldom talked about. One is regret. Those falling under this category would say, “ I miss doing the work that I love.” “I don’t think retiring is for me. I want to go back to my office.” “I’m not sure what to do with my time. I feel lost.” The second is about health. Some are worried about keeping their mind and body healthy and still thinking of adding value to the world. Many fear dying in pain and discomfort.
The third major challenge is about identity. People do not see you anymore and you get feelings of rejection. People fear losing their identity created over a lifetime. In my case, am not anymore the controversial labor attaché nor the torMENTOR director I once was. The 4th is about finding purpose after retirement. The fifth is worrying about poverty and losing one’s dignity. What comes to mind about the last challenge are low or zeero savings, no emergency funds, inadequate pension, no health insurance or huge hospitalization expenses, especially when the children are also not in a position to provide.
All these challenges are due to the failure of the state and the individual workers to prepare for retirement.
The Philippines has the second worst pension system in the world. It has a rating of only 42 with the top performers of about 90 (Iceland, Netherlands and Denmark) with 100 as the highest. This score is based on the weighted average for 3 categories, namely adequacy or amount of benefits given to seniors, sustainability or the level of real economic growth of the country, and integrity which concerns regulation and governance of the pension system. The Philippines scored 40.5 on adequacy, 52.3 on sustainability, and 30 on integrity. The integrity rating is the worst in the world. If not appropriately addressed, its efficacy and sustainability is in doubt.
The average GSIS pension is P18k while the SSS is only P5k. Most retirees also use their retirement benefits to build their dream houses and buying vehicles. Others start going into business. Houses and cars do not provide additional nor passive income. A failed business is difficult to revive if the retirees have no assets convertible to cash.
Emergencies such as accidents and old-age sickness will complicate the worries of the retirees.
Individually, majority of Filipinos are not prepared for retirement. Finance Secretary Benjamin Diokno, when he was still the governor of the Bangko Sentral ng Pilipinas, stated that 80% of the almost 8 million senior citizens in our country have no pension nor enough retirement savings. Only 20% of retirees have pension plan and worst, those who have health insurance are so few.
I know of a 68 year-old retiree who was a former manager of a courier company and of a security agency. He has a young wife and a 7-year old son. His monthly pension is only a little over P4K. Their house rental is 7k. He was diagnosed with a liver cirrhosis with seven (7) prescription medicines costing about P2.5K/week. One day, he came to the house to seek assistance knowing that I was formerly with the DOLE and my spouse is a social worker. He still wanted to work. But who will employ him at his age and health condition? We referred him to the DSWD.
There are many causes for the inability to prepare financially for retirement. One of those is “wrong money mind set.” Many believe that financial education is only for the wealthy and the wrong solution to many financial challenges is to borrow money. Some rely on luck.
Some are also “saving the wrong way.” Many still end up with nothing after working for 20-30 years all because we, and I include myself in this list, do not know how to invest properly. The Philippines has a mandated 13th month pay for all workers. In some private companies they even have 14th and 15th month pay. Saving and later on investing these could be a good preparation. But for many “hindi alam ang tama.”
A number also are “baon sa utang at hirap mag retire”. Many use their credit cards as emergency funds. They also borrow to pay debts. Their repayment appears good but their debt burden is growing.
Yes, many good, hardworking, good young and old fail. They do not plan to fail but they just failed to plan. They retire with no emergency funds, no healthcare and no extra income.
If money can only talk, it will definitely tell most of us, “save me now and I will save you tomorrow”. This may sound funny but it has wisdom. More likely, many of those self-employed who are now in their twilight years do not have savings except possibly for those in business and a few farmers with big tracks of land, have assets which are convertible (not very liquid) to cash in times of need.
Thousands of workers today, especially those in the informal sector, are mostly in the so-called underground economy and engaged in gig employment. They do not have savings either and worse, they are not enrolled with the social security system.
So, what are we waiting for? Shall we rely on pension system which is one of the worst in the world. Or wait for employers who seem insensitive to the retirement needs of their employ?
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Author’s email: [email protected]
