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Philippine pension fund says Filipino workers abroad must contribute

June 24, 2019

Philippine state-run pension Social Security System (SSS) is standing firm on the decision to require millions of Filipinos working overseas to make compulsory contributions to the fund even though some oppose the move as an added burden on the workers, many of whom are employed as domestic helpers.

Legislation passed this February makes it mandatory for Filipinos workers abroad to contribute 12% of their monthly salaries to the SSS, the same as private sector employees within the country. The contribution rate was increased from 11% previously, and will rise to 15% by 2025.

Previously, contributions from Filipino workers abroad were voluntarily.

"The law was a product of in-depth and long discussions between the SSS, its stakeholders and the lawmakers from the upper and lower chambers [of Congress]," SSS, a pension fund for private sector workers, says in a statement on June 20.

According to Susan Ople, president of the Blas. F. Ople Policy Centre and Training Institute, a non-government organisation focusing on the rights of Filipinos employed abroad, compulsory pension contributions are "an additional burden on overseas Filipino workers".

“Any imposition of additional financial burdens would push our workers away from existing legal deployment channels and make them less competitive against their rivals,” Ms. Ople says in a statement on June 17.

But the pension fund says contributions should be seen as savings and not as an added expense.

“SSS offers seven kinds of benefits - sickness, maternity, disability, retirement, funeral, death, and unemployment - which could all be availed of by overseas Filipino workers,” it adds.

The fund says public hearings were held both before and after the passage of the legislation, “contrary to recent claims that some sectors, particularly [Filipinos working overseas] were not consulted in crafting the law".

It says the hearings were attended by representatives of various groups, including the Filipino Association of Mariners' Employment Inc., Philippine Association of Service Exporters Inc., and the Coalition of Licensed Agencies for Domestic and Service Workers Inc. There was also a public forum about the mandatory pension coverage.

The SSS says there were 325,061 overseas Filipino workers contributing to the fund as at end-March 2019, which was only 14.13% of the 2.3 million employed abroad estimated by the Philippine Statistics Office as of September 2018.

Meanwhile, the SSS says total contributions to the fund has increased over the past four years, from 132 billion pesos (US$2.56 billion) in 2015 to 181 billion pesos in 2018.

The fund had close to 500 billion pesos of assets under management as of end-2018, 43% of which was invested in government bonds and 19% in stocks, with the rest in bank deposits, loans to members, corporate bonds, real estate and funds of funds.