A relative who had worked in the United States but decided to go back to Manila is living off her monthly social security pension. She couldn’t live off that pension in the United States. How she manages to survive here with it, is a mystery to me.
The last time I checked my account, my monthly SSS pension has increased but it still barely covers the cost of my prescription maintenance medications. It will probably cover my annual abdominal ultrasound test.
This is why 15 years after I have officially retired from my main job, I still work. I feel so blessed by our Lord that He guided me to save some during my working years to cover the costs of getting old.
But most senior citizens in our country today are left with too little resources to cover the increasing costs of living. Essentially, the biggest worry for those in my generation is getting very sick and not being able to afford the cost of the pay-as-you-go system in our for-profit hospitals.
These morbid thoughts about the economic costs of aging were sparked by an article last week that declared the Philippine pension system as the third worst in the world. That’s according to the 2025 edition of Mercer CFA Institute’s Global Pension Index.
Our grade improved to 47.1 in 2025 from 45.8 in 2024, way below the 64.5 global average. Last year, the Philippines’ pension system was also the third worst out of 48 systems.
And here’s the kicker: 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 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. Sounds reasonable but nothing that we can expect soon.
It also said the Philippines’ requirements for vesting in private sector plans should be improved.
Speaking of pensions, Duterte only took care of the military and the police when he increased their pensions and indexed it to current salaries of serving personnel. That’s obviously because he was buying the support of the folks who have guns and have in the past, overthrown governments.
The budget for military and uniformed personnel (MUP) pensions is rising significantly, with a proposed 2026 allocation of P216.54 billion, which is up 50 percent from the previous year.
Unlike private sector workers and other government employees, MUPs do not contribute to their pension fund. Costs are entirely shouldered by taxpayers.
Indexing the retirees’ benefits to active personnel’s salaries, which averaged P335 billion annually from 2019-2022, has made the pension cost a growing fiscal burden.
The Department of Finance noted that the MUP pension was 80 percent of expenditures for active-duty personnel services in 2022. That’s almost like having double our MUP personnel count with only half working.
We are not saying the MUPs do not deserve their comparatively generous pensions. Indeed, the indexation, for instance, recognized a need that should have also been recognized for other government workers.
That the MUPs are the only ones who do not contribute to their pension plan is a sour point that has also made it financially unsustainable. Because it is an unfunded liability, the finance department has warned that failing to reform it could lead to a fiscal collapse or jeopardize the country’s investment-grade rating.
Unfortunately, Duterte placed all future administrations in a bind. It will be difficult and dangerous to take back benefits already given, especially because the affected groups have control of the national armory.
Without diminishing the worthiness of the MUPs to enjoy their generous pensions, who is to say that the public school teachers are less worthy to enjoy a similar one? The danger of Duterte playing favorites will be for future generations to live with.
As for the rest of the oldies struggling with financial challenges at a time of diminished economic earning capacity, they also deserve the government’s special concern beyond the patronage ayudas.
One government agency with a plan to help members save for old age is the Pag-IBIG Fund. The fund is supposed to help members get proper housing, but it has the voluntary Modified Pag-IBIG 2 (MP2) savings program.
For 2024, the Pag-IBIG MP2 savings program paid an annual, tax-free dividend rate of 7.10 percent. This was a slight increase from the 7.05 percent rate in 2023 and the 7.03 percent in 2022.
The rate is not guaranteed and varies each year based on the fund’s financial performance. This allows members to grow their funds, with the total accumulated value being refundable upon retirement.
Pag-IBIG’s MP2 has shown pretty good performance that can compete with what private sector fund managers like insurance mutual funds offer. But it seems to be a well-kept secret and the Pag-IBIG Fund should publicize it more. Again, it’s tax free.
The SSS has a similar plan called Workers’ Investment and Savings Program (WISP) Plus and the Personal Equity and Savings Option (PESO) Fund. Those in the middle class now in their 40s should consider savings plans like these so they won’t have to worry about sliding to poverty in their older years.
And for seniors who choose to continue working, a lifetime exemption from income and other taxes is a reasonable way to recognize their contributions to society and the economy. Senior citizens discounts are peanuts and not really demonstrative of the government’s appreciation of their contributions to society.
There are supposed to be representatives of senior citizens sitting in Congress as party-list members. Unfortunately, they aren’t innovative nor caring of their constituents. It is time for them to show they are worth their seats.