Old age woes

A recent report once again confirmed how dismal the state of our country’s pension system is.

According to the 2025 edition of Mercer CFA Institute’s Global Pension Index, the Philippines’ pension system remained the third worst among 52 retirement income systems covered by the index.

Last year, our pension system was also the third worst out of 48 systems worldwide.

The report noted that while the Philippines’ score – graded based on adequacy, sustainability and integrity – improved to 47.1 in 2025 and 45.8 in 2024, primarily due to clarification of regulations, our score was still way below the 64.5 global average.

The pension systems in the Philippines, Turkey, Argentina and India were given a “D” grade, which means that while the system has some desirable features, it also has significant weaknesses that should be addressed. And without these improvements, the system’s efficacy and sustainability are in doubt, the report said.

The Netherlands had the best pension system with a score of 85.4. Its pension system was given an “A” grade, and so did Iceland, Denmark, Singapore and Israel, which means that they had robust and sustainable systems that deliver good benefits with a high level of integrity.

While the Philippines scored 47.1 overall, other countries in the ASEAN region fared better. Singapore’s score was at 80.8; Malaysia, 60.6; Vietnam, 53.7; Indonesia, 51 and Thailand, 50.6. Elsewhere in Asia, China scored 56.7; Hong Kong, 70.6; India, 43.8; Japan, 56.4; Korea, 53.9 and Taiwan 51.8

The Global Pension Index reviews an economy’s retirement income systems based on three weighted subindices:   adequacy, sustainability and integrity.

In terms of adequacy, our score went down to 40.6 this year from 41.7 last year, which was below the global average of 66.1 for adequacy. The Philippines’ sustainability score improved to 64.4 from 63.4, which was higher than the global average of 55.3. For integrity, our score improved to 33.2 from 27.7, but this is significantly lower than the global average score of 74.7.

The report also revealed that the Philippines was the only economy in the integrity sub-index that had an “E” grade, indicating a poor system that may be in the early stages of development or non-existent.

It described the Philippine retirement income system as comprising of a small basic pension and an earnings-related social security pension, where members can receive a lifetime pension if they have contributed for a minimum of 180 months for government and 120 months for those in the private sector. If the minimum number of contributions is not satisfied, then members will receive calibrated benefits.

The Mercer report highlighted that the Philippine pension systems could be improved if the minimum level of support for the poorest elderly is increased. The benefits are aligned with the country’s cost of living, that the country’s requirements for vesting in private sector plans should be improved, that the local pension system lacks cashout options for retirement plan proceeds so they are preserved for retirement purposes, and that there is a need to improve governance requirements for the private pension system.

The country has two main pension funds, namely the Social Security System (SSS) for private workers and the Government Service Insurance System for government workers.

While SSS pensioners as of Aug. 31 this year started receiving higher pensions starting September, with retirement and disability pensions increasing by 10 percent yearly every September until 2027, and death or survivor pensions rising by five percent each year, the amounts that the members are receiving are meager and not enough to meet even the basic needs.

A report from the Department of Finance revealed that the average monthly pension for SSS retirement pensioners will increase from P4,923 to about P6,548 per month after the third tranche of pension increases.

According to data from Numbeo, a single person in the Philippines needs around P31,770 per month to cover basic expenses, excluding rent. If that retiree belongs to a family of four, then that amount rises to around P109,770 monthly.

Meanwhile, the Philippine Statistics Authority says that a family of five needs at least P13,874 per month based on the official poverty threshold to meet minimum basic needs, including food.

Being a retiree in the Philippines is not something one can look forward to.

Without a comfortable pension, how can one continue paying for food, medicines, medical expenses, utilities, transportation and rent?

According to an ASEAN report, despite their importance, old-age pensions are also accessible for a minority of people in many countries. In Brunei Darussalam and Thailand, the proportion of older persons receiving a pension is at 81.7 percent and 83 percent, respectively, while in the Philippines and Vietnam, it is around 40 percent.

To guarantee income security in old age, income from work still represents the primary source of income for 45 percent of older people in the Philippines, while the rest comes from family support.

Ideally, the purpose of an old-age pension system is to guarantee a person’s regular receipt of income during their old age and to guarantee a “freedom from want,” meaning the pension amount should be at least above the poverty level, the report said.

But this purpose is hardly achieved given the amounts pensioners are receiving.

Some might say, why not save or invest for your old age?

But how can one save when your monthly pay is not enough to cover your expenses, and any increase in your salaries or wages cannot keep up with inflation?

Senior citizens and retirees have spent their entire lives contributing to society, raising their families, and the least that the government can do is help maintain their independence, well-being and quality of life.

We have monthly cash grants of P1,000 per month for indigent senior citizens without pensions, a senior citizen discount of 20 percent for necessities, value-added tax exemptions on food and services, and health insurance coverage via PhilHealth.

But then again, these are not enough.

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