RETIREMENT preparedness in the Philippines has been assessed as suboptimal based on a survey of 1,000 adults, Insular Life Assurance Co. Ltd. (InLife) said.
“We want a higher score because the score indicates how prepared we are as a nation,” InLife Chief Marketing Officer and Chief Bancassurance Officer Gae L. Martinez said at a briefing on Tuesday.
The Philippines was rated 47 on a scale of 100 on InLife’s retirement index, which the company said was in the medium range but far from optimal.
The survey respondents were aged 18 to 59 across various income classes.
“47 is on the low side so there’s definitely a lot of room to improve the readiness of Filipinos,” InLife Chief Product and Innovation Officer Jose Eduardo O. Ang said.
“Many Filipinos only begin to seriously think of retirement if there are changes in their life. So, if they get married, they have children. It’s often reactive. We don’t have a proactive mindset in terms of retirement,” InLife Business Insight and Community Management Head Abigail A. Magtibay said.
“For the average Filipino, there’s still a tendency (to keep funds in) savings or digital wallets, but what will be good to increase our retirement readiness would be to diversify into other financial instruments. We also look at insurance ownership. Inlife policy holders scored 62 compared to their counterparts that do not have an Inlife policy, who scored 42,” she said.
“Filipinos who feel excited about retirement, and have a positive sentiment toward retirement, will score significantly higher on the index. In contrast, those who are indifferent or anxious will tend to delay planning. Of course, that would mean a lower score,” she added.
“The index also shows that social support is a key driver. People who regularly discuss retirement with their family, with their friends, or financial advisors would score higher because they are more prepared,” she said.
Ms. Magtibay added coverage under the Social Security System and Government Service Insurance System is insufficient, especially for those in informal employment.
“Many Filipinos, especially those in the freelance or gig economy or informal employment, have no employer-provided pension plans and have limited awareness for their entitlements. The index shows that pension participation contributes significantly to retirement readiness. On the other hand, those who have employer-provided pension plans would show higher preparedness,” she said. — Aaron Michael C. Sy