As ranked last Monday, October 21, among the 36 countries surveyed, the Philippines had the fourth-worst retirement system.
According to the Australian-backed report, the 2019 Melbourne Mercer Global Pension Index consider PH’s retirement system as sustainable, yet lacking integrity and adequacy. This year was the first time the country was included in the said report.
Measured according to sustainability, adequacy, and integrity
The report includes index scores (100 as the highest) of 36 countries around the world. The Philippines had an overall score of 43.7 rounded off to 44, ahead only to Turkey, Argentina, and Thailand.
The Netherlands got the highest score of 81, ahead of only one point to Denmark.
The index scores were measured through three different sub-categories: Sustainability, adequacy, and integrity.
PH was the 15th best in terms of “sustainability” with an index score of 55.5. In this sub-category, some considered factors are private pension systems’ economic impact, the expected length of retirement, the current government debt status, participation of the older population in the labor force, and economic growth.
The country got an index score of 39.0 for the “adequacy” sub-category. This part considers the benefits given to the poor and range of income earners, as well as the improvement of the overall retirement income system.
The “integrity” sub-category composed of three considerations: (1) regulation and governance; (2) protection and communication for members; and (3) operating costs. Sadly, at the first inclusion in the report, the country ranked the last at a score of 34.7.
The Philippines as an aging society
Harold Tan, Wealth Leader at Mercer Philippines, stated alongside with the recent study, “by benchmarking global retirement income systems, the Melbourne Mercer Global Pension Index can help both the public and private sectors in the Philippines understand how they can improve the country’s retirement system and generate better outcomes for retirees.”
“Based on its results and ranking in its first inclusion in the Index, the Philippines can consider increasing the minimum level of support for the poorest aged individuals and widening coverage of employees,” Tan continued. “It can also look into setting aside funds in the public system for the future and introducing options for retirement plan proceeds to be preserved for retirement purposes.”
He had a lot to say about the topic of PH’s current retirement system as he’s been analyzing the countries where Mercer operates for the last 11 years.
The author of the study, Dr. David Knox said, “systems around the world are facing unprecedented life expectancy and rising pressure on public resources to support the health and welfare of older citizens. It’s imperative that policymakers reflect on the strengths and weaknesses of their systems to ensure stronger long-term outcomes for the retirees of the future.”
Indeed, the life expectancy of the world’s general population had increased. In PH’s case, a publication from the Philippine Institute for Development Studies confirmed that the country is becoming an aging society. Looking at the numbers, it means that in the year 2015, 7.4 percent of the Filipinos were aged 60 years old and above. Also, as projected in the year 2014, that percentage of age group would go up to 15.9 percent.
Source: Coconuts Manila