 Today's episode of Financial Sense aims to improve the financial literacy of retirees and would-be retirees by understanding the financial concepts, services and options that will empower them to make informed and judicious choices, decisions and actions to enjoy their retirement and improve their financial well-being for the rest of their life. Our hosts and resource persons will talk about the importance of planning in preparation for a comfortable and stress-free life through an effective balancing of savings, pension versus expenses and needs versus wants. How do retirees fare when it comes to saving and preparing for the future? Welcome to our program Financial Sense and today we tackle an important topic which will interest those who are retired, about to retire and who still have a few more years to retire. I am Elena Pernia, your host for today and together with my partner here, finance professional par excellence, Alfredo Pascual. Thank you Nanny and I would like to greet our viewers a good day. Our episode will explore how those currently working and those with still several years to go before retirement can save for retirement and what's next for employees after retirement? Do you know that in reality a lot of people do not prepare for retirement and very often it's seen as a decrease in income rather than the reward that it should be. Also in the Philippines, you know, children are expected to care for their aged parents when they have retired. But now some Filipinos are deviating from this norm. There are the lucky ones who have prepared so well that they have their own personal savings, pensions and assets that can provide them the spending money that they need when they are no longer working. That's definitely true about children taking care of aged parents but as a not really a parent I don't want to bother my children for taking care of me on my retirement. While some people get to enjoy a restful life after retirement, most people continue working to earn more because the benefits after retirement are not enough for day to day expenses of their families. That is why we have invited resource persons who will give retirees guidance on possible sources of income. Also this will give current employees ideas on how to better plan for retirement. So let me begin the introduction of our important experts in the field of retirement. First is the officer in charge of GSIS-Kason City branch office, Mr. Noel Alvarez. We would like to welcome to the Assistant Vice President for Media Affairs of Social Security System, SSS, Luisa Paraga-Sebastian, Louie for short. Welcome. And we are also thankful that the President of the Federation of the Senior Citizens Association of the Philippines or FESCA, Mr. George Benal has agreed to join us today. So we will be hearing about RA-9505 or the Personal Equity and Retirement Account or PERA. So for this we welcome Mr. Mark Reyes. Let's begin with Mr. Alvarez with Noel. What advice can you give retirees so that they can better manage their pension and retirement money? So our prospective retirees should have knowledge or equipped with the different options or the retirement laws that GSIS manage, like what are you qualified for the RA-8291 or the GSIS act of 1997, are you qualified for the refund of retirement premiums, what we call the take all or the RA-1616, the 7699 or the Portability Law or the PD-1146 and RA-660. So that is like what Ma'am Neni said, some of the retirees are not aware or not planning for their retirement, but we encourage everyone that they should be equipped with the different knowledge or the laws we are managing. Wow, that's a long list of many republic acts of different numbers. Now how do you get your GSIS members understand what these laws are all about and how they can benefit as GSIS members? So we at the GSIS are inviting our prospective retirees for a pre-retirement seminar. In that pre-retirement seminar, we discussed detailed the different retirement laws including the options like if you obey RA-8291, we have two options, the first option is the five year lump sum and pension after five years and the second option is the 18 month cash payment and the immediate pension. So also we are giving them tentative computations of their benefits and also we are inviting a resource speaker from Philippine insurance, Philippine Deposit Insurance Corporation or the PDIC where in our resource speaker from PDIC is giving them knowledge on how to better manage their pension. Of course we have to tell our audience that GSIS has government workers as members. Now for those working in private companies or the private sector, I'd like to call on Louis of SSS to explain how it is for the private employees. SSS is probably the cheapest form of saving for your retirement. It only takes a member to remit 120 months of contributions and it does not mean continuous contributions. You can like have contributed when you have income and then come back to the system when you are actively employed again or if you have other sources of income. We have different classification of members. We have those who are employed in the private sector, those who we call self employed or earning on their own and then we also have voluntary members who at one time or another left the system, probably they are OFWs or overseas Filipino workers and they came back to the system after a while and decided to contribute again. There is only one formula for computation of pension under the SSS. So unlike the GSIS which has several laws that other than the portability law anyway. The pension computation of SSS is basically there are two factors that we consider. Only the credited years of service or the number of years that you have credited to the system and the monthly salary credit. This is where the contribution rate is applied, not necessarily contribution. So our monthly contribution is anywhere from 110 pesos to the maximum of 1760 pesos and for that amount you already get six types of benefits and pension is transferred 100 percent to the surviving spouse or to the dependent children. Can I be a member of both the GSIS and the SSS? Yes ma'am. You will be classified as probably self employed. Have you worked in a private company before? No, I've been a government employee for most of my life but I do have some consultancies. Then that would count. That would count. We have a lot of GSIS members now who are contributing to SSS on a voluntary capacity. And then they get two pensions when they retire. I see. So yeah, so two is definitely better than one. Yes ma'am. I don't think we've heard about the benefits available from GSIS. Can you just give us a quick rundown? Pension, of course there is. Yes. And then the cash benefit. If you have pension, if you are in the service, if you have a total length of service of at least 15 years, definitely you are a pensioner, a GSIS pensioner. For cases of those with three years but less than 15, you will be entitled for what we call the cash payment. Cash payment, if you are as 60 years old on the day of your separation, you get it immediately, the cash payment. However, if you are less than 60, again, you are in the government service for at least three years but less than 15 and you are less than 60 on the time of your separation, you will get the cash payment when you reach the age of 60. That's the difference. If you are already 60, you get immediately the benefit. Please correct me if I'm wrong, but I actually still have a few more years before I reach mandatory retirement age, but I have wanted to retire already. Would you counsel me? Would you advise me to take an early retirement? You have an option, ma'am. If you reach the age of 60, you are already entitled for what we call the optional retirement. If you want to enjoy, again, if you want to choose a five-year lump sum, you mean the computed basic monthly pension on time 60, you'll get it on a guaranteed period, then pension at age 60. If you want to have that option two, wherein most of our retirees are getting the option two, why? Because option two seems to be, you are still in the government service, meaning you get the 18 months cash payment, 18 months of your basic monthly pension, and you receive pension on the day of your retirement, meaning you receive it monthly, and even though you are in abroad, if you are at home, you receive a monthly pension without tax, then that's a better option, and most, as I mentioned, most of our retirees are availing of the option two, which is the immediate pension. So I can enjoy earlier the necessary, okay, good. I think that's good advice. Thank you very much. Welcome. So we've seen how GSIS and SSS can help our retirees, particularly senior citizens. And we have here, of course, he was introduced earlier, Sir George Banal from FESCAP, who is very much involved in assisting senior citizens in their retirement. George, would you like to share with us? First and foremost, I'd like to thank SSS, because the much awaited, the long delayed 2,000 pesos pension hike has at long last been given to us. It's retroactive, you know. So January, February, and March, we receive 3,000 pesos, and the balance of the 2,000 pesos increase will likely be given five years from today. So we talked about it, I hope it's not too much, maybe a lot of us are dead. I felt guilty because I could have been a pensioner of both. I served the Kesson City Council for 13 solid years as a city councilor. I have known about the portability law, but I sort of forgot to avail of it. So it's a pity because SSS has been good to me. But what I received is not really sufficient. You know the Philippine Constitution mandates that the family should take good care of the senior citizen. But you know, with eight children, we are independent because during my younger years, I was a salesman and a marketing man. So I saved for the future, I have a trust fund, but I did not really plan for retirement. Is it still possible to be a pensioner of GSIS with my 13 years of service? As mentioned, sir, if you are at least 15 years, you will be a pensioner. For your cases, it's only 13, so I think we paid you a cash payment. I received the cash payment, but when I retired from the city council in 2004, I had to voluntarily continue. Because you had the years in the private sector, which should have been added, under the portability law that you referred to earlier. So I guess for those of you out there who are in a similar situation, please remember it's 15 years. For GSIS? Yes, for GSIS, only 10 years. It's only 10 years. So but if you have got 13 years working in government, well then you can continue when you reach the 15 year minimum. Is that correct? Or you add up your years in the private sector. May I make additional comments? So at my age, I'm past 70, I still work. And because of my inadequacy in GSIS, I maintain a trust fund. And now we have a law, we call it Anti-AIDS Discrimination Employment Act. Under this law, even if you are past 60, you can still be employed. There are no advertisements below 40 years old. As a matter of fact, Kesson City has been employing about more than 400 senior volunteers, paying them regular pay and also business establishments like SM malls. They employ traffic aides, greeters. And so we senior citizens are still qualified to work for as long as we are mentally and physically capable. Well, there is the statement that the new 30 is 60, or maybe it's the other way around. 60 is the new 30. So you can start work, still work, and while benefiting from that senior citizen card. Now ma'am, if I may, obsolete the young life begins at 40, because today life begins at 60. Okay, so you heard that. I agree. You heard that. Life really begins at 60. You have double citizenship when you reach 60. Well, George referred to managing a trust fund. Maybe we should now go to our fourth guest to tell us about PERA. It is a way by which people can voluntarily build up a retirement fund. Okay, Mr. Reyes, Mark, please explain this. Actually the PERA is mandated by Republic Act 9.05 or the Personal Equity and Retirement Account Act of 2008. But the implementing rules were only released by the BIR in 2016, after the first half of last year. And this, the law or the implementing rules and regulations required banks, like the big banks to create this product, which is actually a voluntary account where investors or employees can complement their GSI and their GSI and SSS pension funds. And they can do this, they can contribute every year for a maximum of 400,000 pesos. They can do that. For OFWs, they can contribute up to 200,000 pesos. And the funds that go into this account, they get to choose where to invest it. There's a menu of financial instruments where you can, or investment vehicles where you can put your funds in. And with that in mind, what is the benefit from that? You get tax credits. So for every amount of funds that you put into the account, you get an equivalent of 5% tax credits, which you can use against your taxes payable next, in the following year, yes. So that's a new scheme that has recently been made available. They say that it's actually patterned after the USS 401Ks. Yeah, the 401K system in the US, that's right. May I ask a few questions about that one? I heard that there's kind of an informal age limit to avail of PERA. Actually, in order to avail of PERA, there are two things only that requires you to be, that there are only a few two things that you should have. First is you should have the capacity to contract. And then secondly, you should have the thing. No age to consider? Well, considering the term capacity to contract. No, I mean on the upper end. On the upper end, actually, I have to mention this. The only time you can redeem the funds that should be invested in PERA is the keywords are 5 and 55. So after five years worth of contribution, and at the age of 55, that's the only time you can reclaim your... But anytime after 55? And anytime after 55, yes. I see. So you could take it out even if you're 60. Yeah, like George's still earning at more than age 70. So you can still establish a PERA account. Do not need the funds yet. Keep it there and let the funds grow. And after a few years, you feel like you want to claim some of the funds. You can do so. So take it when you want to enjoy it. Yes. And if you want to actually avail of PERA, you can go to... Actually, there are two accredited PERA administrators. You have BDON, BPI. I see. So it's also has a maximum of 100,000, right? 100,000 pesos. For Filipino residents, for OFWs, The maximum is 200,000 pesos. Annually, yes. SSS is a similar separate regular retirement option. It's called the SSS Pesofon. It's a personal equity savings option fund. It's offered to members 55 years old below. And it also has the same features. You can only invest up to 100,000 a year. Yes. Because, you know, one of the limitations of the SS law, which right now is a really... It has a maximum monthly salary credit of 16,000. Meaning, no matter how much you're earning, you can only contribute to as much as only 16,000. So right now, most of the investors in our Pesofon are BPO young people aged 34. So the financial literacy in terms of retirement is already there. And it's good if they have other options. Because, again, that's also one of the limitations of ours in that personal equity savings option fund. They're asking, why is it only 100,000 annually? Because precisely, of course, there are also other... We would also like to support our financial institutions. Sorry, saying there's a maximum monthly pension that you pay from SSS. There's a maximum monthly salary credit to where our contribution rate is applied for. That determines the highest pension. Yes. And how much is that? Right now, the highest pension is at 17,000 pesos. 17,000. GSIS has no limit, isn't it? It's limited by the, of course, the actual salary of the retiree. And by the salary standardization law, I suppose. Yes, that's right. So that's why my mother's pension, who was, and she worked in government, was much higher than my father's pension, who worked in the private sector. It almost downpour to the contribution, the contribution that you remitted to the system. But if they say that people in the private sector earn more than those in the government service, then they will have excess funds to invest in their... True. True. Okay, and that's how they build up their pension. Right. The contribution is 11% on SSS and 21% on GSIS. GSIS, a lot, yeah. So it's a bigger fund. And yeah, GSIS is a much bigger pension fund. Well, you heard it from our experts today. It's not just one, not just two. There could be three and even more. So consider that while you are still working, and maybe when you have reached retirement age and are beyond it, you can have a lot more to enjoy. Yes, our discussion now is really for those who are still actively working and thinking of eventually retiring in the future. When I say retiring, the longer working. Okay, and how they can prepare for that time. Do we have any final words from our guests? This is one of the lessons for all of our SSS members. Your contribution, even though this is a few years that you have been paid for the SSS, it's not that you will lose it. So what time do you want to return and pay for the SSS? You are welcome to return to your pension system so that when the time comes, you will be able to pay for the SSS benefits. GSIS as well. Okay. First of all, thank you for inviting us here so that we can also say or give us information for our prospective retirees on what options they can avail if they have already decided to retire. So I am also inviting all of our members and even our pensioners to visit our website, www.tss.gov.ph. We have a new feature, a facility that we call EGSIS, Electronic GSS Member Online. If you say, if you are taking a selfie, if you are doing Facebook, if you are doing research, if you are doing Google, if you are doing Online Membership Records, EGSIS. That is our facility that you know, all of your records, even your loan payments, your dividend payments, you will see here in your EGSIS. You do not need to go to the nearest GSS office to see your records. In order to see tablets, hyphos, and our gadgets, you can see your records in the GSS. In order to see your EGSIS, EGSIS Member Online. There is no PILA. There is no PILA. There is no PILA. It is 24-7. The thing I asked you before, is it my contributions to GSS in 1969? I will see it in the Record Online. You will see it, sir. You will just log in to your EGSIS. We are using it in our login. We call it business partner number. So to also log in Facebook registered, so you will be registered first, then you will be given your password, then when you are already confirmed or registered, then you will be using your login access. At any time, you can see that the President said that he can see if his record in 1969 was updated in our system. You will also be able to coordinate with your agency authorized officer here at UP, for example. Then they will be given our information that these services are not yet reflected in our system, and with all supporting documents, this will be updated. If you validate it, it should be included as your servicer, that will be updated by our members of the membership department at the GSI Central Office. Is the business partner number my GSIS contract number? No, we used to have a policy number, that is the contract we are talking about. Now, we are calling it a unique business partner number. We are calling it a GSI number, but all of our members now have that business partner number as our identity in the system. So it is part of the computerization? Yes, sir. I also have a question. Just like me, 13 years in government service, do you have any hope of becoming a member of GSIS? Sir, just like you said, the system that can still enter the GSI, if you can still enter the GSI, where is our system now? Of course, it should not exceed 65. Sir, if you can still enter the GSI, where is our system now? Currently, our system should not exceed 65. But if you are like our elected officials, they are 64, elected as mayor for example. Then, through their term, even if they are already 70, they can still be a member of the GSI. That is why I also have a question. I know that you have a craft that is like a law or an executive order that might say that the law is like I forgot to take advantage of the portability. So I inquired from GSIS anyway. That is why anti-aging discrimination law is a bit lacking, because the mandatory retirement is not released. So if you are really going to give up the law for anti-aging discrimination, there should be no retirement age. I just have a question. How do you get your benefits? How do you get your pension at age 65? Can this continue? Well, again, if you get the benefit, and you are more than 65, if ever you are a consultant, you will no longer be a GSS member, you will no longer be able to pay your premiums. But for example, I will add one more thing. The question is, do you have a pension now? Do you have a pension now? For example, you are 61. Your previous retirement was in 2003. Now, when you are 60, you can get your pension even if you are 61 or 62. You will be receiving a pension from your previous services. If you have a chance to reenter, or you are still in the government service, even at the age 65, if you have a chance to reenter, for example, if you meet again for 15 years, you will be able to receive two pensions from GSS. From the pension, from the services, from your previous services for 15 years, then upon reentry, and upon compulsory retirement at age 65, if you still have another 15 years, you will get another pension. So you will have two pensions from the GSS. That's okay. As we said before, 60 is the new 30. So you can do it. Like with Sir George. In the GSS, on average, we paid 24 years of pension. Like in the GSS, we paid 20 to George. 60 is the new 30. Life begins at 60. In our last age, you can be a member of the GSS. First time member, 59. Because again, the optional age of retirement... How old can you maintain your membership? As long as you have someone to fall for, for example, one day, and you want to return, even if you are 60 years old, but you want to return, for example, you have one year a day, and you need nine years to return. So continue that. There is no age requirement for you to continue your pension. You will only finish the number of years, 120 months, so you can have a pension. So even if you have no money, then you have a 70. You will have a pension for a month. And you can be a member of that. For your independent husband and for your dependent children. You heard that. Legal. That's it. Legal husband. That's a good point. Life expectancy now is rising by 10 years. So maybe you need to amend the rules there. Because for us men, life expectancy is 68. Not 69 because 68. For women, it's about 72. It's longer. The woman always outlives the man. So maybe stronger. Oh, stronger. We have a stronger doubt. We haven't yet heard the details of the FESCAP for senior citizens. Thank you very much, Mr. President. We are encouraged by the young ones upon a time to indulge in healthy and active aging. We have orientation seminars. We go to the provinces and we orient. And so as much as possible, we hope to avoid the restrictions. Smoking, smoking, smoking, smoking and eating too much. If you don't want to get caught, we have a centenarian law that gives 1,000,000 who can last 100 years. Many of you got caught. My father passed away in 1998. Mayor Herbert Bautista from LGU in Kesung City gave 100,000. So on top of that, in the National Law, Centenarian Law, we gave 100,000 for that 200,000 to detect the situation. That's what we do. And that's what we do for bills to be translated into laws so that there will be more benefits and privileges. My job is I'm the Legislative and I love you Chairman. So I'm always in love. So the children who passed away and now there is an elder abuse that is not just physical. The one you are trying to remember they will be punished. And there are also the children in the special polling places that are sometimes applied to the malls so that we will not go to the third, fourth floor where after three hours the others will leave and they will not go to the bottom. And perhaps a separate date or in a polling place like what we do in other countries so that we can encourage and exercise the right of suffrage. I heard from Tito George that my pension is small in SSS. When the issue of pension came out that SSS has very low pension it was also a wake up call to everybody. And now the question is how do we get the highest pension at SSS? So the one that was mentioned and that SSS is always received and why in our country as you can see monthly salary credit means the amount that is applied to your 11% contribution and the credit and years of service or how long you spend on SSS. The amount that is received is 17,000 and the maximum is 18,000 because we gave 1,000. So the highest pension in SSS is 18,000 but they are always paid by credit. That means they always have the highest contribution because our monthly salary credit is high and on the average they are paid for 40 years. For example, when I worked for 20 years and I didn't have money to spend on SSS until 40 years they are paid for 18,000 monthly pension. The amount that is received is higher at the end. Whether it is GSIS or SSS but that does not apply to money. Actually I was going to add regarding the money aside from the tax credits of 5% of the total contribution you also get to enjoy actually tax yields from income taxes capital gains tax, final withholding tax for your investments. So that's another incentive for account holders. So that means I can use my account to deduct from my income tax responsibilities? No ma'am. When you invest direct to security meaning you bought a stock or a bond directly in the secondary market you are always charged with income taxes capital gains with the bear account you are exempted from such taxation. Mr. President I would like to ask add what Tito George said that our centenarians gave a peasant seat of 100,000. We are also in GSIS on September 1, 2015 all of our pensioners on September 1, 2015 are 90 years old we bought 30,000 95 years old pensioners we bought 50,000 and on September 1, 2015 we bought 100,000 100 years old we bought 100,000 all of our pensioners on September 1, 2015 on September 2, 2015 we gave 20,000 and on September 1, 2015 we bought 30,000 and on September 1, 2015 we bought 50,000 really it is important that we heard Mr. President life is long so what do we do we will be conscious because if life is long there will be a lot of benefits especially in GSIS we will give what we call milestone benefit I would like to add not in finances the key to longer life is being happy yes that is why we are happy let us all smile and let us laugh there is yoga laughter you laugh without any reason at all that is why without are we together but I will add the important not only long life but productive life active life healthy life I want to say I want to say we have to be concerned about health so far we are talking about income in retirement we have not talked about expenses but expenses are among those you manage when you talk about finances in retirement medical expenses are among the biggest take on your retirement income to maintain a healthy life to minimize that cost so whatever amount of retirement income you have it will not be sufficient if a big part of it will be spent on maintenance medicine and other medical expenses so just make sure that the benefits that you get the happy birthdays that you will get from both GSIS and sometimes from SSS will not go to the doctor will not go to the medicine but will actually be yours to enjoy is that right that is the kind of message we would like to share with our audience I am very happy we had this session because through this session I hope to help not really just retirees but those planning to retire sometime in their working life I hope that the information we have shared with you today will be very helpful in your planning a enjoyable a happy retired life in the years to come yes we would like to thank our guests here thank you very much Louis Tito George Mark and Noel thank you very much and of course thank you our viewers we hope that this episode helped you be happy be healthy and always think about the future we hope also that you will watch our financial sense thank you and have a great day