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QUESTION: Philippines Retirement Pension for Filipino Wife

Discussion in 'Banking - Investing - Finances' started by Brian Oinks, Apr 8, 2017.

  1. Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    I need advice from someone who is good at math or understands the Social Security system here... Has anyone else here set up a Social Security payment scheme for their Filipina Wife?

    My Wife went into the SS Dept. and set up a payment plan as "Self Employed" after speaking to the Staff there. We are trying to set up a decent retirement plan for her, which she will pay into for 30 years before being eligible to retire.
    She currently pays 1100php per month which was the figure suggested by a Staff member.

    She has asked SS several times as to what would her Pension be approximately if she keeps paying monthly for the next 30 years, but so far no informative reply has been given. I plan to raise the amount each year from the initial 1100php to try and adjust for the rise in cost of living to give her a better outcome in time to come...

    The plan is to pay into SS for 30 years so that she may draw a pension when she reaches 60 years of age, so far she has paid for the past 2 years, so 28 years remaining before she is eligible to retire...

    I have looked at the web page (link below) but find it utterly confusing to say the least! Can anyone decipher for me please and maybe give an approximate expected monthly Pension amount she 'may or may not' receive upon retirement? is the Pension a set amount or is it dependent on how much is contributed? Hard to say by what I have read thus far... :o o:

    Retirement Benefit
    There are two types of retirement benefit:​
    • monthly pension - a lifetime cash benefit paid to a retiree who has paid at least 120 monthly contributions to the SSS prior to the semester of retirement.
    • lumpsum amount - granted to a retiree who has not paid the required 120 monthly contributions. It is equal to the total contributions paid by the member and by the employer including interest.
    Monthly Pension
    • Benefit Computation
    The monthly pension depends on the member's paid contributions, his credited years of service (CYS), and the number of his dependent minor children that must not exceed five. The monthly pension will be the highest amount resulting from either one of these three pension formulae:
    1. the sum of P300 plus 20 percent of the average monthly salary credit plus two percent of the average monthly salary credit for each credited year of service (CYS) in excess of ten years; or
    2. forty (40) percent of the average monthly salary credit; or
    3. P1,200, if the CYS is at least 10 but less than 20; or P2,400, if the CYS is 20 or more.
    The monthly pension is paid for not less than 60 months. A member who retires after age 60 with a total of 120 monthly contributions may be qualified to a monthly pension based on whichever is higher of the following:
    • the monthly pension computed at the earliest time the member could have retired had been separated from employment or ceased to be self-employed plus all adjustments thereto; or
    • the monthly pension computed at the time when the member actually retires.
    A pensioner who retires more than once shall be entitled to the higher of:
    • the monthly pension computed for the first retirement claim; or
    • the re-computed monthly pension for the new claim
    Republic of the Philippines Social Security System
     
  2. Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    Maybe it would be better to avoid the Philippine Government all together and start a savings account and/or invest the money. I have heard from many different people that the government is regularly late with paying SS checks or makes it extremely difficult to get the checks. Would you knowingly give your money to a conman? That's basically what happens when you sign up for SS with the Philippine government. How long until some corrupt politician comes in and swipes all the money out of the SS?
     
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    Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    Found some more but obviously you need to be a Rocket Scientist to calculate! :geek:


    How is the monthly pension computed?

    The monthly pension shall be the highest of:

    a) 300 + (20% x AMSC*) + (2% x AMSC) x (CYS**–10);

    Or b) 40% x AMSC;

    Or c) The minimum pension of P1,200, if with at least 10 CYS; or P2,400, if with at least 20 CYS, whichever is applicable.

    * AMSC (Average Monthly Salary Credit)

    ** CYS (Credited Years of Service)

    The monthly pension of a member who retires after age 60 and who has contributed the required 120 monthly contributions shall be the higher of the following:

    a) monthly pension computed at the earliest time the member could have retired had he/she been separated from employment or ceased to be SE, plus all adjustments thereto;

    Or b) monthly pension computed at the time when the member actually retires.

    https://www.sss.gov.ph/sss/DownloadContent?fileName=2016_SSS_Guidebook_Retirement.pdf
     
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    Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    Also states the *following but asking the SS Staff here in Dumaguete is met with blank expressions or; "Sorry I cannot tell you that Ma'am"... :rolleyes:


    * How can a member know when is the optimum time to file for retirement so that he/she gets the most of the benefit?

    A member shall be advised of the amount of the monthly pension benefit that he/she will receive upon filing of the retirement application and the amount that he/she will stand to receive if he/she decides to continue paying contributions as a VM.
     
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    Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    And that doesn't happen in the West? As I understand it in Australia Income Tax was introduced so the people could retire on a pension. In the 80's they took away that privilege and introduced Superannuation where a worker needed to self-fund their own retirement, and the GST was supposed to replace the Taxes on your Salary, instead of revoking Income Tax they kept that in place and added it to the GST, instead of removing Excise (& other hidden) Taxes they kept those also. I read online where both the Labor and Liberal Governments had an act passed in Parliament where they will now have future access to Trillions held in trust for Superannuation funds and plan instead to hand out a Pension in place of Retiree's being able to receive half their Superannuation and roll the rest for investment... Politicians are oxygen thieves at best!
     
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  6. Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    I didn't say anything about the West. However, if I could stop paying into the US SS and start putting that money into my own savings and investment accounts I absolutely would. If the much less corrupt Western countries can barely (debateable) manage a SS program what makes anyone think that the Philippines could? Where I think the Philippines actually does a much better job is by making it optional for its citizens. Give it time, I'm sure the new nanny state (communist sympathizers) will eventually get ahold of that program and make it mandatory.
     
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    Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    Just trying to make sure the Wife has a somewhat secure future after I am gone, not really sure how else to go about it with the exception of 'I hope' a future business of sorts that we hope will one day bring an a decent income for her and the Daughter...

    I REFUSE to invest money after taking out a "Term of Life" Insurance Policy with MLC just after I married my first wife. Was drummed into believing their hype that I would have a minimum of $10,000 in my investment kitty after my policy matured (POSSIBLY 20K++ YEAH RIGHT!) after 10 years. Got into financial strife after my accident and had to cash it in when it reached maturity to save going bankrupt. I had paid in around $2,500 and worked it out when I was sent the cheque, I was paid out $40.00 above my investment!! MLC tried so hard to get me to roll it over with them again for another 10 years and told me I was mad for cashing it in! I told them I was MAD for believing their BS and would be STUPID IF I rolled it over or ever dealt with them again! Lesson learnt! :rolleyes:
    Now the same BS is happening to so many back in Oz who's Superannuation investments are being eaten up in fees and bad investing on the part of the companies handling their future retirement contributions. I think the ONLY way is to save the money you earn in the Bank and HOPE you are paid a small interest instead of having to pay fees... :mad:
     
  8. Rye83

    Rye83 with pastrami Secured Account Highly Rated Poster SC Connoisseur Veteran Army

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    Life insurance is not really investment IMO. At least not for you. I understand that poo happens but life insurance is not meant to be pulled out before you die. Did the fine print of the contract not mention the massive penalties of cancelling early? (Early being before you die.) Investing can be dangerous if you don't do your research but not investing for your future can have massive negative consequences.

    I don't think you can say you will never invest money again because of your past experience.... That's exactly what your are trying to figure out how to do in this thread. I can't/won't suggest to let the government, especially the Philippine mafia...err, I mean government...do it for you but maybe someone else has a different opinion on the subject.
     
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    Brian Oinks

    Brian Oinks That's Mr. Pig to you Boy! :) Highly Rated Poster

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    True and I feel the only real way to do this is to get dirty hands and do some honest too goodness hard work, nothing comes for free does it... :rolleyes:
    I do have plans to eventually try something here, nothing new, nothing that someone else will steal and better, basically "when in Rome do as the Roman's do" and do it the same way as the locals... :wink:
     
  10. Dutchie

    Dutchie DI Member Showcase Reviewer Veteran Army

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    Brian,

    Public pension systems, from whatever country, in theory all rely on the same type of calculations with regard to their finances.
    Basically, and roughly speaking, you would need a crystal ball to determine whether or not it is a good idea to take part.
    If your wife expects to live to be a centenary then by all means go right ahead and pay up the maximum contribution to get the maximum SSS pension, because she will not regret it.
    If however she were to die prematurely before or shortly after reaching the eligible age for a pension application then paying into a system like the SSS will prove to be a bad option, obviously.
    Systems like the SSS hedge the risk of having to pay out a multiple of contributions to people who live long (through pensions), by giving those who die early nothing or just a little.
    Statistically the average life expectancy for females in the Philippines stands at around 72. If you do the math, you'll discover that your "break even" point with the SSS pension is also around 7 to 8 years (when retiring at 65). So nothing gained, nothing lost.
    The only good reason to enroll is the consideration that in all likelihood the economy will keep growing and living standards (wages) will eventually go up. The bet would then be that the government will decide to compensate pensioners for increasing price levels and a bit extra. Compared with current interest rates on a savings account, that perspective sounds a lot nicer.
     
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