Philippine retirement system among worst in the world
The Philippines had an overall index value of 43.7, just above Turkey, Argentina, and Thailand.
The index takes into consideration the pension system’s sustainability, adequacy, and integrity.
It also considers the level of retirement income provided to replace the previous level of employment earnings.
“By benchmarking global retirement income systems, the Melbourne Mercer Global Pension Index can help both the public and private sectors in the Philippines understand how they can improve the country’s retirement system and generate better outcomes for retirees,” said Harold Tan, wealth leader of Mercer Philippines.
The study recommended increasing the coverage of employees and support for the poorest aged individuals, setting aside public funds for the future, and introducing non-cash out options for retirement plan proceeds to improve the Philippines’ index performance. (READ: [OPINION] How Duterte endangers your retirement)
In terms of integrity, the Philippine pension system is at the very bottom of the list. This area considered regulation and governance, protection and communication for members, as well as operating cost.
The country was the third lowest ranking in terms of adequacy. This sub-index considered the benefits provided to the poor, as well as design features that enhance the efficacy of the overall pension system. (Rappler Talk: Is pension for all possible?)
On the upside, the Philippines was in the top 15 for the most sustainable in terms of level of funding, length of expected retirement, labor force participation rate of the older population, and the current level of government debt and economic growth.
The Netherlands had the highest index value of 81 and has been the consistent leader for the 10 of the past 11 reports.
“Systems around the world are facing unprecedented life expectancy and rising pressure on public resources to support the health and welfare of older citizens. It’s imperative that policy makers reflect on the strengths and weaknesses of their systems to ensure stronger long-term outcomes for the retirees of the future,” said David Knox, author of the study.
This means that by 2032, the elderly, or those aged 65 and older, would comprise at least 7% of the total population. By 2069, it will be at least 14%. – Rappler.com