Filipinos work because they want to have something to look forward to when they retire. Is that really true? Can our present work now sustain what we need after we retire?
I say NO!
This post is intended for Filipinos who are thirty-nine and below.
You should not depend on Social Security for any portion of your retirement. Here are the reasons why:
1. SSS does not have enough funds to cover retirement and other benefits beyond 2039. SSS President and Chief Executive Officer Emilio de Quiros Jr. stated that SSS will collect 11 % from the monthly salaries of employees in January 2014. This has increased from the 10.4% which is the current collection. The state-run pension fund has to increase the membership premium because it does not have enough money to cover retirement and other benefits beyond 2039.
2. SSS gave large bonuses to its employees and board of directors. Just imagine how a government agency can mismanage its funds. How can you sustain the retirement benefits of your clienteles if you spent more funds compared to the revenues they gain? Their liabilities are greater than their assets. De Quiros admitted that the Board of Directors and employees obtained P200 million in 2012 in their performance-based incentives. Their 8-member board of directors reportedly got at least P1 million each as bonuses.
3. SSS has large unfunded liabilities. In President Benigno Aguino III’s fourth State of the Nation Address (SONA) on July 22, 2013 said that the funds are bound to become insufficient by 2018 because of the P1.1 trillion liabilities that are unfunded. You can imagine what happens to this large pool of funds when SSS pays more than what pays in. It will really dry up.
If you are disillusioned by the performance of SSS and you do not want to depend solely of your retirement with your retirement plan, you can solve this problem by diversifying your income. Your SSS contributions come from your employment. If you see that your employment cannot sustain beyond 65 years of your life and you want to find a solution to this, you can send me an email and I can help you generate a plan. If you agree or disagree with the post above, feel free to share your comments on the comment box.
To Your Financial Success!
Lornajane Altura
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lornajanealtura@gmail.com
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