I presently in a quandary if I should already retire or not. You see, I have reached the number of years in my company when I could already avail of the full retirement benefits, including the monthly pension for life. And at my age now, I know I can still get an employment or go freelance. This would mean an additional to the pension I would be getting.
However, I'm also having second thoughts because I know I still do not have enough savings and investments. My kids are still in school and as a single parent, I have no one except myself to depend on. Well, that's my dilemma for now and I know I really have to think things over and over before making the final plunge.
Monday, July 20, 2009
Thursday, July 16, 2009
GSIS retirement benefits
The Government Service Insurance System or GSIS is for government employees while the Social Security Service is for non-government members. Government employees who are members of the GSIS will receive their retirement benefits in accordance with their qualifications.
The GSIS listed the four retirement modes available to government employees.
Those who were in the service on or before May 31, 1977 may avail of retirement benefits under RA 660, RA 1616, PD 1146 or RA 8291, while those who entered government service after May 31, 1977 may avail of retirement benefits under PD 1146 or RA 8291.
Retirement Under RA 8291
This retirement mode provides two options: The Lump-sum plus Age Pension and the Cash payment plus Pension.
1. The retiree must have rendered at least 15 years of service and must be at least 60 years of age upon retirement.
2. He/she must not be a permanent total disability pensioner.
There are 2 options to choose from:
1. Lump-sum and Old Age Pension (Option1) Lump -sum equivalent to 60 months of the Basic Monthly Pension (BMP) payable at the time of retirement, and an old age pension benefit payable monthly for life, if the retiree is still living after the 5 year guaranteed period.
2. Cash payment and Basic Monthly Pension (Option2)Cash payment is equivalent to 18 times the Basic Monthly Pension (BMP) payable upon retirement and monthly pension for life payablefrom date of retirement.
Retirement under Presidential Decree 1146
The retirement mode applicable if you have been in service after May 31, 1977 but before June 24, 1997.
The retiree must have rendered at least 15 years of service, regardless of age. If retiree is below 60 years old upon retirement, he/she may avail of retirement benefits only upon attaining his 60th birthday.
The benefit is any of the following:
1. Basic Monthly Pension (BMP) For those who are at least 60 years of age and have rendered 15 years of service. The basic monthly pension is guaranteed for 5 years. After the 5-year guaranteed period, he/she will receive a basic monthly pension for life. A retiree may request for the payment in lump-sum of the Basic Monthly Pension for the guaranteed period of 5 years at a discounted rate of not less than 6%.
2. Cash Payment (CP)For those who are at least 60 years of age and has rendered at least 3 years but less than 15 years of service. The cash payment shall be equal to 100% of the Average Monthly Compensation (AMC) for every year of service.
Retirement under Republic Act 660
The retirement mode applicable if you were in the service on or before May 31, 1977.
1. The retiree's last 3 years of service prior to retirement must be continuous, except in cases of death, disability, abolition, and phase- out of position due to reorganization.
2. His/her appointment status must be permanent in nature.
3. He/she must meet the age and service requirements under the "Magic 87" formula
4. The maximum monthly pension for those above 57 years old shall be 80% of the Average Monthly Salary (AMS) received during the last 3 years immediately preceding retirement. The Maximum pension for those aged 57 and below shall be 75% of the AMS
The benefit is any one of the following:
1. Automatic Pension. Retirees below 60 years old shall be qualified to a monthly annuity guaranteed for 5 years with the option to request for a one-year lump sum every six months. If the retiree is still living after the 5-year guaranteed period, he/ she shall be entitled to a monthly pension for life.
2. Initial three-year lump sum/ For those who are at least 60 years old but less than 63 years on date of retirement, the benefit is a 3-year lump sum. The subsequent two -year lump-sum shall be paid to the retiree on his 63rd birthday. If the retiree is still living after the 5-year guaranteed period, he shall be entitled to a monthly pension for life.
3. Five-year lump sum. Available to those who are at least 63 years of age or over on the date of retirement. If still living after the 5-year guaranteed period, the retiree shall be entitled to a monthly pension for life.
Retirement under Republic Act 1616 or Gratuity Retirement Benefit
The retirement mode applicable if you were in the service on or before May 31, 1977.
1. The retiree must have rendered at least 20 years of service regardless of age and employment status.
2. His/her last 3 years of service prior to retirement must be continuous, except in cases of death, disability, abolition or phase out of position due to reorganization.
The benefits are:
1. Gratuity payable by the last employer based on the total creditable service converted into gratuity months multiplied by the highest compensation received.
2. Refund of retirement premiums consisting of personal contributions of the employee plus interest, and government share without interest, payable by the GSIS.
If your years of service to the government do not meet the required number of years under a certain retirement law and you have enough number of years service in the private sector to compensate/substitute for the service requirement, you have the option to apply for retirement under the Portability Law (RA 7699).
So for those government workers who are now contemplating retirement or are nearing their retirement age, its time to start financial planning.
The GSIS listed the four retirement modes available to government employees.
Those who were in the service on or before May 31, 1977 may avail of retirement benefits under RA 660, RA 1616, PD 1146 or RA 8291, while those who entered government service after May 31, 1977 may avail of retirement benefits under PD 1146 or RA 8291.
Retirement Under RA 8291
This retirement mode provides two options: The Lump-sum plus Age Pension and the Cash payment plus Pension.
1. The retiree must have rendered at least 15 years of service and must be at least 60 years of age upon retirement.
2. He/she must not be a permanent total disability pensioner.
There are 2 options to choose from:
1. Lump-sum and Old Age Pension (Option1) Lump -sum equivalent to 60 months of the Basic Monthly Pension (BMP) payable at the time of retirement, and an old age pension benefit payable monthly for life, if the retiree is still living after the 5 year guaranteed period.
2. Cash payment and Basic Monthly Pension (Option2)Cash payment is equivalent to 18 times the Basic Monthly Pension (BMP) payable upon retirement and monthly pension for life payablefrom date of retirement.
Retirement under Presidential Decree 1146
The retirement mode applicable if you have been in service after May 31, 1977 but before June 24, 1997.
The retiree must have rendered at least 15 years of service, regardless of age. If retiree is below 60 years old upon retirement, he/she may avail of retirement benefits only upon attaining his 60th birthday.
The benefit is any of the following:
1. Basic Monthly Pension (BMP) For those who are at least 60 years of age and have rendered 15 years of service. The basic monthly pension is guaranteed for 5 years. After the 5-year guaranteed period, he/she will receive a basic monthly pension for life. A retiree may request for the payment in lump-sum of the Basic Monthly Pension for the guaranteed period of 5 years at a discounted rate of not less than 6%.
2. Cash Payment (CP)For those who are at least 60 years of age and has rendered at least 3 years but less than 15 years of service. The cash payment shall be equal to 100% of the Average Monthly Compensation (AMC) for every year of service.
Retirement under Republic Act 660
The retirement mode applicable if you were in the service on or before May 31, 1977.
1. The retiree's last 3 years of service prior to retirement must be continuous, except in cases of death, disability, abolition, and phase- out of position due to reorganization.
2. His/her appointment status must be permanent in nature.
3. He/she must meet the age and service requirements under the "Magic 87" formula
4. The maximum monthly pension for those above 57 years old shall be 80% of the Average Monthly Salary (AMS) received during the last 3 years immediately preceding retirement. The Maximum pension for those aged 57 and below shall be 75% of the AMS
The benefit is any one of the following:
1. Automatic Pension. Retirees below 60 years old shall be qualified to a monthly annuity guaranteed for 5 years with the option to request for a one-year lump sum every six months. If the retiree is still living after the 5-year guaranteed period, he/ she shall be entitled to a monthly pension for life.
2. Initial three-year lump sum/ For those who are at least 60 years old but less than 63 years on date of retirement, the benefit is a 3-year lump sum. The subsequent two -year lump-sum shall be paid to the retiree on his 63rd birthday. If the retiree is still living after the 5-year guaranteed period, he shall be entitled to a monthly pension for life.
3. Five-year lump sum. Available to those who are at least 63 years of age or over on the date of retirement. If still living after the 5-year guaranteed period, the retiree shall be entitled to a monthly pension for life.
Retirement under Republic Act 1616 or Gratuity Retirement Benefit
The retirement mode applicable if you were in the service on or before May 31, 1977.
1. The retiree must have rendered at least 20 years of service regardless of age and employment status.
2. His/her last 3 years of service prior to retirement must be continuous, except in cases of death, disability, abolition or phase out of position due to reorganization.
The benefits are:
1. Gratuity payable by the last employer based on the total creditable service converted into gratuity months multiplied by the highest compensation received.
2. Refund of retirement premiums consisting of personal contributions of the employee plus interest, and government share without interest, payable by the GSIS.
If your years of service to the government do not meet the required number of years under a certain retirement law and you have enough number of years service in the private sector to compensate/substitute for the service requirement, you have the option to apply for retirement under the Portability Law (RA 7699).
So for those government workers who are now contemplating retirement or are nearing their retirement age, its time to start financial planning.
Tuesday, July 14, 2009
Preparing for a stress-free retirement
Retirement is the point in a person's life when he stops employment completely, or, he may also semi-retire and keep some sort of retirement job, out of choice rather than necessity.
This usually happens upon reaching a determined age (in most companies the mandatory retirement age is 60), when physical conditions don't allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings).
We should be prepared for this major turning point in our lives. And as a guide, we need to ask these questions to ourselves: When should I start saving for retirement? Where should I save my retirement money? How should I invest the money? How much money will I need in retirement? Will pensions be enough? How much should I save? What if I can't save enough? Is my savings enough? When can I retire?
Being financially ready is a must so we can have a peaceful and stress-free retirement. So start preparing now.
This usually happens upon reaching a determined age (in most companies the mandatory retirement age is 60), when physical conditions don't allow the person to work any more (by illness or accident), or even for personal choice (usually in the presence of an adequate pension or personal savings).
We should be prepared for this major turning point in our lives. And as a guide, we need to ask these questions to ourselves: When should I start saving for retirement? Where should I save my retirement money? How should I invest the money? How much money will I need in retirement? Will pensions be enough? How much should I save? What if I can't save enough? Is my savings enough? When can I retire?
Being financially ready is a must so we can have a peaceful and stress-free retirement. So start preparing now.
Sunday, July 12, 2009
What is the Philippine Retirement Authority?
Many of us do not know this but there is a government office that is in charge of making the Philippines an attractive retirement destination.
The Philippine Retirement Authority (PRA) is a government owned and controlled corporation mandated to attract foreign nationals and former Filipino citizens to invest, reside and retire in the Philippines with the end-view of accelerating the socio-economic development of the country, contributing to the foreign currency reserve of the economy and by providing them the best quality of life in the most attractive packages.
It was created by virtue of Executive Order No. 1037 which was signed by then President Ferdinand E. Marcos on 04 July 1985. On 31 August 2001, through Executive Order No. 26, the control and supervision of PRA was transferred to the Board of Investments (BOI) from the Office of the President.
It's vision is to make the Philippines a globally competitive and preferred retirement destination in Asia. On the other hand, PRA's mission is to provide excellent and world class services centered towards customer-valued quality of life that is easy, pleasant and beneficial to foreign retirees and global Filipinos, as a channel of accelerating the socio-economic development of the country.
I'm just curious if the PRA also caters to local retirees. I certainly hope so.
The Philippine Retirement Authority (PRA) is a government owned and controlled corporation mandated to attract foreign nationals and former Filipino citizens to invest, reside and retire in the Philippines with the end-view of accelerating the socio-economic development of the country, contributing to the foreign currency reserve of the economy and by providing them the best quality of life in the most attractive packages.
It was created by virtue of Executive Order No. 1037 which was signed by then President Ferdinand E. Marcos on 04 July 1985. On 31 August 2001, through Executive Order No. 26, the control and supervision of PRA was transferred to the Board of Investments (BOI) from the Office of the President.
It's vision is to make the Philippines a globally competitive and preferred retirement destination in Asia. On the other hand, PRA's mission is to provide excellent and world class services centered towards customer-valued quality of life that is easy, pleasant and beneficial to foreign retirees and global Filipinos, as a channel of accelerating the socio-economic development of the country.
I'm just curious if the PRA also caters to local retirees. I certainly hope so.
Saturday, July 11, 2009
News about retirement
I recently came across this news report at the Philippine Daily Inquirer website. It's very informative and I think this should be read by everyone.
Prepared for retirement? Think again
By Daxim LucasPhilippine Daily Inquirer
First Posted 00:20:00 07/06/2009
MANILA, Philippines - It doesn't matter
how old you are, but if you thought last
year that you’re all covered when your
retirement time comes, you might want
to think again.
Given the financial upheaval caused by
the global economic crisis, UK-based
banking giant HSBC believes that a
“perfect storm,” of demographic,
individual and financial elements, is
poised to derail people’s retirement
plans “unless they prepare properly now.”
This recommendation is among the
insights revealed in the latest survey of
the bank’s HSBC Insurance unit, which was
published recently.
Perfect storm
“A perfect storm is confronting pensions
planning, created by an aging
population, falling pension funds values, a
drop in state and employer contributions
and an economic downturn which is
forcing people to make tough financial
choices,” HSBC group chair Stephen
Green said about the findings.
According to the findings of the fifth
annual Future of Retirement study,
people’s short-term survival strategies
during a recession often create “serious
long-term pension ‘downturn deficits.’”
It also noted that there is “a continuing
lack of pensions planning, even though
people are aware that they are likely to
live longer” which is being exacerbated
by “poor levels of financial
understanding, education and access to
advice.”
Also during difficult financial times,
people are more concerned with
protecting their possessions in the short-
term than ensuring they can look forward
to a financially secure retirement, the
survey revealed.
“The consequence of these combined
factors is that many people will struggle
to make ends meet when they come to
retire, unless they urgently review their
priorities and planning,” the HSBC study
concluded.
The survey culled its findings from 15,000
respondents in Brazil, Canada, China,
France, Hong Kong, India, Japan, Mexico,
Saudi Arabia, Singapore, South Korea,
Turkey, the United Arab Emirates, the
United Kingdom and the United States.
The results are used by HSBC to structure
financial solutions for an estimated 128
million clients worldwide.
The latest edition—dubbed “It’s Time to
Prepare”—identified a ‘preparedness
gap’ in people’s pensions planning
worldwide, with nearly nine out of 10
people feeling ill-prepared for their
retirement.
It found that only 13 percent of the
respondents feel fully prepared for their
retirement, and 86 percent are unsure of
what income they will receive in
retirement.
Only 27 percent feel they fully understand
their long-term finances, while 43 percent
have undertaken some planning for later
life—but still remain unclear about what
their retirement income will look like.
More alarmingly, 14 percent have done
“no retirement planning at all.”
“The preparedness gap reveals that
families need greater support and
guidance to effectively handle their
finances, not simply in schools and
colleges but through trusted advisers
providing professional financial
guidance,” Green said.
Golden opportunity
“If people prepare adequately for the
long-term, an extended later life can
present a golden opportunity for many—
but now is the time for people to seriously
consider boosting their pensions
contributions to improve their prospects
of a comfortable retirement,” he added.
“The cost of procrastination is likely to be
high.”
Nonetheless, the study found sufficient
basis for hope in strengthening the
financial prospects of people of all ages,
as their move toward retirement.
The so-called “advice gap” showed that
there is a need for solid financial advice
to help this market, which financial
service firms like HSBC can provide.
The survey revealed this advice gap
linking the lack of preparedness to
insufficient financial education and
guidance.
A full 43 percent of respondents have
never had any form of financial
education, and 29 percent felt “fairly
unprepared” for their retirement,
according to the findings.
Almost half—or 47 percent of
respondents—have never had any form
of professional financial advice, it added.
“This year’s report reveals a need for
people to have access to more and
better financial advice and guidance to
help them survive the downturn while
making the right financial decisions for
the long-term,” said HSBC Insurance
group managing director Clive Bannister
in a statement.
But perhaps the most alarming results of
the survey showed that, in trying to
protect their finances during the ongoing
crisis, many people are actually putting
themselves in greater financial danger,
inadvertently.
People are paying little attention to long
-term considerations such as their likely
retirement needs, focusing instead on
purely practical short-term concerns,
which they better understand, HSBC said.
“General insurance solutions—motor,
travel, home and even pet insurance—
are seen as a greater priority than
addressing longer-term needs around
insuring health or income, even when job
security is in question,” the survey said.
Delay in retirement
And despite global economic
uncertainty, only 6 percent said they
intend to take out income protection
insurance in the next 12 months
compared to 16 percent insuring their
home.
Also, as a result of the economic
downturn, 92 percent of people have
changed some element of their finances,
with only 19 percent still on track to retire
according to their original plans.
Because of the crisis, about 17 percent
are reducing retirement savings or
stopping saving for retirement
altogether, while 18 percent have used
savings to pay off debt.
Along with the global trend, 9 percent of
respondents now expect to delay their
retirement.
“[The survey] reveals the lack of
understanding people have around their
long-term retirement needs, said Cicero
Consulting financial services consultancy
director Mark Twigg, whose group
conducted the survey. “They are less well
-educated or aware when trying to
understand these needs and to act on
them, than with their short-term
requirements.”
“As the economic ‘perfect storm’
threatens, it is important that people are
encouraged to understand long-term risks
and to manage them effectively. While
people are taking more responsibility for
themselves, there is also a definite role
for financial institutions to continue, and
to build on, their work to educate and
inform,” he said.
http://business.inquirer.net/money/topstories/view/20090706-213995/Prepared-for-retirement-Think-again
Prepared for retirement? Think again
By Daxim LucasPhilippine Daily Inquirer
First Posted 00:20:00 07/06/2009
MANILA, Philippines - It doesn't matter
how old you are, but if you thought last
year that you’re all covered when your
retirement time comes, you might want
to think again.
Given the financial upheaval caused by
the global economic crisis, UK-based
banking giant HSBC believes that a
“perfect storm,” of demographic,
individual and financial elements, is
poised to derail people’s retirement
plans “unless they prepare properly now.”
This recommendation is among the
insights revealed in the latest survey of
the bank’s HSBC Insurance unit, which was
published recently.
Perfect storm
“A perfect storm is confronting pensions
planning, created by an aging
population, falling pension funds values, a
drop in state and employer contributions
and an economic downturn which is
forcing people to make tough financial
choices,” HSBC group chair Stephen
Green said about the findings.
According to the findings of the fifth
annual Future of Retirement study,
people’s short-term survival strategies
during a recession often create “serious
long-term pension ‘downturn deficits.’”
It also noted that there is “a continuing
lack of pensions planning, even though
people are aware that they are likely to
live longer” which is being exacerbated
by “poor levels of financial
understanding, education and access to
advice.”
Also during difficult financial times,
people are more concerned with
protecting their possessions in the short-
term than ensuring they can look forward
to a financially secure retirement, the
survey revealed.
“The consequence of these combined
factors is that many people will struggle
to make ends meet when they come to
retire, unless they urgently review their
priorities and planning,” the HSBC study
concluded.
The survey culled its findings from 15,000
respondents in Brazil, Canada, China,
France, Hong Kong, India, Japan, Mexico,
Saudi Arabia, Singapore, South Korea,
Turkey, the United Arab Emirates, the
United Kingdom and the United States.
The results are used by HSBC to structure
financial solutions for an estimated 128
million clients worldwide.
The latest edition—dubbed “It’s Time to
Prepare”—identified a ‘preparedness
gap’ in people’s pensions planning
worldwide, with nearly nine out of 10
people feeling ill-prepared for their
retirement.
It found that only 13 percent of the
respondents feel fully prepared for their
retirement, and 86 percent are unsure of
what income they will receive in
retirement.
Only 27 percent feel they fully understand
their long-term finances, while 43 percent
have undertaken some planning for later
life—but still remain unclear about what
their retirement income will look like.
More alarmingly, 14 percent have done
“no retirement planning at all.”
“The preparedness gap reveals that
families need greater support and
guidance to effectively handle their
finances, not simply in schools and
colleges but through trusted advisers
providing professional financial
guidance,” Green said.
Golden opportunity
“If people prepare adequately for the
long-term, an extended later life can
present a golden opportunity for many—
but now is the time for people to seriously
consider boosting their pensions
contributions to improve their prospects
of a comfortable retirement,” he added.
“The cost of procrastination is likely to be
high.”
Nonetheless, the study found sufficient
basis for hope in strengthening the
financial prospects of people of all ages,
as their move toward retirement.
The so-called “advice gap” showed that
there is a need for solid financial advice
to help this market, which financial
service firms like HSBC can provide.
The survey revealed this advice gap
linking the lack of preparedness to
insufficient financial education and
guidance.
A full 43 percent of respondents have
never had any form of financial
education, and 29 percent felt “fairly
unprepared” for their retirement,
according to the findings.
Almost half—or 47 percent of
respondents—have never had any form
of professional financial advice, it added.
“This year’s report reveals a need for
people to have access to more and
better financial advice and guidance to
help them survive the downturn while
making the right financial decisions for
the long-term,” said HSBC Insurance
group managing director Clive Bannister
in a statement.
But perhaps the most alarming results of
the survey showed that, in trying to
protect their finances during the ongoing
crisis, many people are actually putting
themselves in greater financial danger,
inadvertently.
People are paying little attention to long
-term considerations such as their likely
retirement needs, focusing instead on
purely practical short-term concerns,
which they better understand, HSBC said.
“General insurance solutions—motor,
travel, home and even pet insurance—
are seen as a greater priority than
addressing longer-term needs around
insuring health or income, even when job
security is in question,” the survey said.
Delay in retirement
And despite global economic
uncertainty, only 6 percent said they
intend to take out income protection
insurance in the next 12 months
compared to 16 percent insuring their
home.
Also, as a result of the economic
downturn, 92 percent of people have
changed some element of their finances,
with only 19 percent still on track to retire
according to their original plans.
Because of the crisis, about 17 percent
are reducing retirement savings or
stopping saving for retirement
altogether, while 18 percent have used
savings to pay off debt.
Along with the global trend, 9 percent of
respondents now expect to delay their
retirement.
“[The survey] reveals the lack of
understanding people have around their
long-term retirement needs, said Cicero
Consulting financial services consultancy
director Mark Twigg, whose group
conducted the survey. “They are less well
-educated or aware when trying to
understand these needs and to act on
them, than with their short-term
requirements.”
“As the economic ‘perfect storm’
threatens, it is important that people are
encouraged to understand long-term risks
and to manage them effectively. While
people are taking more responsibility for
themselves, there is also a definite role
for financial institutions to continue, and
to build on, their work to educate and
inform,” he said.
http://business.inquirer.net/money/topstories/view/20090706-213995/Prepared-for-retirement-Think-again
The need for retirement planning
When you're young, you never really think about preparing for the time when you have to retire. What is important is the present, the everyday concerns which, admittedly, are already too much to handle for the ordinary Pinoy.
Most of the time, the realization that we have to prepare for retirement planning comes a bit late in the day. Only when the time comes that we have to retire do we realize that we have no financial programs such as retirement funds, investments, insurance to back us up in our old age.
I believe we really to educate the young people about personal finance so that when retirement comes, they can live a good life. I did not have such education and it is only now, when I am nearing my retirement, that I am trying to make the necessary preparations. But it's better late than never. I hope when I retire, I would be able to live a comfortable life, be financially free and enjoy the fruits of my labor.
Most of the time, the realization that we have to prepare for retirement planning comes a bit late in the day. Only when the time comes that we have to retire do we realize that we have no financial programs such as retirement funds, investments, insurance to back us up in our old age.
I believe we really to educate the young people about personal finance so that when retirement comes, they can live a good life. I did not have such education and it is only now, when I am nearing my retirement, that I am trying to make the necessary preparations. But it's better late than never. I hope when I retire, I would be able to live a comfortable life, be financially free and enjoy the fruits of my labor.
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