PHL ranks near bottom of Global Pension Index

The Philippines’ pension system remained the third worst in the world, according to the 2025 edition of Mercer CFA Institute’s Global Pension Index.

The Philippines’ score, which is graded based on adequacy, sustainability, and integrity, improved to 47.1 in 2025 from 45.8 in 2024, primarily due to “clarification of regulations,” the report said.

However, the score was way below the 64.5 global average, and the third-lowest score among 52 retirement income systems in the index. Last year, the Philippines’ pension system was also the third worst out of 48 systems.

In the report, the pension systems in the Philippines, Turkey, Argentina and India, were given a “D” grade. This means the pension system has some “desirable” features but also has “major weaknesses” that should be addressed.

“Without these improvements, its efficacy and sustainability are in doubt,” the report said.

The Netherlands had the best pension system with a score of 85.4. Aside from the Netherlands, the pension systems in Iceland, Denmark, Singapore and Israel were also given an “A” grade, which meant they had robust and sustainable systems that deliver good benefits with a high level of integrity.

The Global Pension Index reviews an economy’s retirement income systems based on three weighted subindices: adequacy, sustainability, and integrity.

The Philippines’ adequacy score went down to 40.6 in 2025 from 41.7 in 2024. This was below the global average of 66.1 for adequacy.

Its sustainability score improved to 64.4 from 63.4, which was higher than the global average of 55.3.

For integrity, the Philippines’ score inched up to 33.2 from 27.7. However, this was significantly lower than the global average score of 74.7.

The Philippines was the only economy in the integrity sub-index that had an “E” grade, which indicates “a poor system that may be in the early stages of development or nonexistent.”

“The Philippines’ retirement income system comprises a small basic pension and an earnings-related social security pension,” the report said.

“Members can receive a lifetime pension if they have contributed for a minimum of 180 months for government and 120 months for nongovernment members. Both schemes provide calibrated benefits if the minimum number of contributions is not satisfied.”

The Mercer CFA Institute report said the Philippine pension systems could be improved if the minimum level of support for the poorest elderly is increased and the benefits are aligned with the country’s cost of living.

It also said the Philippines’ requirements for vesting in private sector plans should be improved.

The report said the local pension system lacks non-cashout options for retirement plan proceeds, so they are preserved for retirement purposes.

It also cited the need to improve governance requirements for the private pension system.

In the Philippines, there are two main pension funds — the Social Security System (SSS) for private workers and the Government Service Insurance System  for government workers.

Starting Jan. 1 this year, the SSS increased the contribution rate to 15%, up from 14%. Under Republic Act No. 11199 or the Social Security Act of 2018, the SSS implemented incremental contribution rate hikes of one percentage point every two years starting in 2019 from the original contribution rate of 11%.

All SSS pensioners as of Aug. 31, 2025 began receiving higher pensions starting September this year. Retirement and disability pensions will increase by 10% annually every September until 2027, while death or survivor pensions will rise by 5% each year.

Source: Business World

How delayed financial planning drains your wealth

For many Filipinos, personal finance often takes a backseat to daily responsibilities. We tell ourselves, "I'll invest when things settle down," or "I'll start saving when I earn more." But while we wait for the perfect moment, time quietly moves on — and with it, the value of opportunities is lost.

Delaying financial decisions doesn't just postpone progress; it creates a hidden cost that becomes painfully visible later in life. The longer we put off financial planning, the more we miss out on our most valuable asset: time.

A tale of two investors

Consider two Filipinos Maria and Juan Maria starts investing P2,000 per month at age 25, consistently until age 60. Over 35 years, she contributed P840,000.

Juan waits until age 35 to start. He invests P3,000 per month until age 60, contributing P900,000 over 25 years.

Assuming an average annual return of 8 percent, Anna ends up with over P7.5 million, while Ben ends up with about P5.5 million.

Why? Because Anna gave her money more time to grow. This is the power of compound interest, where your earnings also start earning.

The key message: you don't need to start big — you just need to start early and be consistent.

The role of banks

Many Filipinos trust savings accounts and time deposits — and for good reason. Banks provide safety, convenience and deposits are insured by the Philippine Deposit Insurance Corp. They're ideal for emergency funds, short-term savings and daily transactions.

But problems arise when people park all their money there, thinking it's enough for long-term goals.

Here's why: typical savings accounts yield less than 1 percent per year, and time deposits offer about 1.5 to 3 percent. Meanwhile, inflation in the Philippines averages 3 to 4 percent annually.

This means your money may grow in pesos but lose value in purchasing power. For example, P100,000 in a savings account today may only have the purchasing power of around P55,000 after 20 years, assuming 3-percent inflation.

Even if your bank balance doesn't decrease, what you can actually buy with that money will shrink significantly over time. It's like your money is standing still while prices keep moving forward.

So while it's wise to keep some cash in the bank for safety and flexibility, it's not ideal to leave everything there — especially money you plan to use five, 10 or 20 years from now.

The emotional cost of doing nothing

Beyond pesos and returns, financial inaction carries emotional costs stress from not knowing where your money goes, regret and frustration when you realize how much time — and potential — you've lost. These emotional burdens often go unnoticed until it's too late.

Three small actions that make a big difference

1. Know where you stand. Understand your current financial picture: list all income sources, track expenses, write down debts and assets, and calculate your net worth (assets minus liabilities). Clarity is the first step to control.

2. Start small, stay consistent. Even P1,000 or P2,000 per month can grow significantly when invested wisely. You don't need a large windfall to begin — what matters is starting now. Set up automatic transfers to mutual funds or digital investment platforms. Consistency beats intensity in wealth-building.

3. Balance your financial strategy. Think in layers short-term (0–one year): bank savings, T-Bills or time deposits for emergencies; medium-term (one to five years): balanced or conservative investment instruments like bonds and FXTNS; long-term (five-plus years): growth-oriented investments like equity funds or real estate.

This ensures your money works with the right mix of accessibility and growth potential.

Don't forget protection

While growing your wealth is important, it's equally vital to protect what you already have — your income, health and family. Life is unpredictable, and emergencies can wipe out years of savings if you're not prepared.

Consider health, life and disability insurance. These safety nets help you and your loved ones stay secure, even when life throws challenges your way.

Think of protection as the foundation that keeps your financial house standing strong so your investment plans don't crumble when unforeseen events occur.

Time is your greatest asset

It's easy to focus on what we can't do right now: "I can't save more," or "I don't know where to invest." But far more dangerous is what we don't realize we're losing by doing nothing: time, peace of mind and future opportunity.

Every year you delay is your future value lost forever. Every small step you take today is a seed planted for a more secure tomorrow. You just need to start.

Source: Manila Times

How to avail of the privileges for the senior citizen in the Philippines?

Elderly Filipino Week is commemorated every October 1 to 7 by Proclamation No. 470, issued by then-President Fidel Ramos on September 26, 1994.

Senior citizens in the Philippines are entitled to various privileges and benefits under the Expanded Senior Citizens Act of 2010.

Here are the steps on how to avail of these privileges:

1. Apply for a senior citizen ID card - Visit your local Office of Senior Citizen Affairs (OSCA) or Office of the Mayor to apply for a senior citizen ID card. Bring a valid ID and proof of age (birth certificate, passport, or any government-issued ID). The ID card is necessary to avail of senior citizen privileges.

2. Avail of discounts - Present your senior citizen ID card when purchasing goods and services to avail of discounts. Senior citizens are entitled to a 20% discount on the regular price of goods and services, such as medicines, food, transportation fare, and hotel accommodations. Some establishments may offer higher discounts.

3. Avail of income tax exemption - Senior citizens who are considered to be minimum wage earners and are not engaged in business or practice of profession are exempted from paying income tax.

4. Avail of social pension - Indigent senior citizens who are not receiving any pension or financial assistance from the government can apply for a social pension. Visit the Department of Social Welfare and Development (DSWD) office or your local government unit (LGU) to apply.

5. Avail of healthcare benefits - Senior citizens are entitled to PhilHealth benefits, which include free medical and dental services, as well as a discount on hospital bills. Senior citizens can also avail of free flu and pneumonia vaccinations in government health centers.

Remember that these privileges are only applicable to Filipino citizens aged 60 and above.

Section 4 of the Expanded Senior Citizens Act of 2010, specifically item (3), provides that "other documents that establish that the senior citizen is a citizen of the Republic and is at least sixty (60) years of age as further provided in the implementing rules and regulations" may also be recognized as valid proof of age and citizenship for senior citizens who do not have a Senior Citizen ID card.

This means that if a senior citizen does not have a Senior Citizen ID card, they may still be able to avail of senior citizen privileges and benefits by presenting other valid government-issued IDs or documents, such as a passport, driver's license, birth certificate, or any other document that can prove their age and citizenship.

However, the specific types of IDs or documents that will be recognized and accepted may vary depending on the implementing rules and regulations set by the local government units and other concerned agencies.

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Source: Ziggurat Real Estate