Beyond Pensions And Loans: 3 Government Savings Programs To Check Out

If you’ve been working for a few years now, you’ve probably gotten used to seeing part of your monthly paycheck go to contributions to the Social Security System (SSS) or the Government Service Insurance System (GSIS) and Pag-IBIG.

The necessity for both these types of funds is usually explained as being for the nebulous “future,” when you retire or can no longer work for some reason or when you set out to buy your own home.

But did you know that, in the here and now, your contributions to these government programs allow you to have access to financial products better than your savings account?

If you’re thinking of bumping up your gains in the near future, why not put your faith—and cash—in the hands of the government through these saving programs?

1. SSS PERA Fund

Last year, the SSS finally made public its long-awaited retirement savings fund. The SSS Peso Equity Retirement Account (PERA) is a step up from the pension you can get from the government in the future.

In a nutshell, PERA works like this: if you have a regular stream of income, you can voluntarily open a PERA account with one of the accredited administrators, which are currently only BPI and BDO.

Since it is not mandatory, you can put in any amount you want as long as you don’t exceed the P100,000 cap for regular workers and P200,000 annual amount for overseas workers. You can also choose which investment vehicle will get your money, such as mutual funds, stocks, securities, and other forms of investment that are allowed by the government.

So what are the perks of getting a PERA account? For starters, this voluntary account supercharges your retirement payout.

Unlike in social pension where you merely have to live with the amount prescribed by the government, you can reap your investments when you’re 55 years old. In addition to your potential yield, you can also get a five-percent tax refund of the amount you poured in your PERA Fund in a year.

What if you suffer from a critical illness or disability and you badly need the money? You can use your PERA savings without penalty if you get hospitalized for more than 30 days or you become totally disabled.

If you prematurely withdraw your money from your account, all the tax incentives you got from your account will be deducted to your account’s value.

(Read: SSS Salary Loan Application: A How-To Guide)

2. SSS Flexi Fund

The SSS Flexi Fund makes savings more convenient and flexible for Filipinos working in a foreign country.

Designed specifically for OFWs, Flexi Fund allows potential investors to pay any amount any time of the year—and you’re guaranteed to get some returns in no time.

Enrolling in the SSS Flexi Fund will require OFWs to contribute at least P200 on top their deductions, but they can pay this additional contribution under terms that are convenient for them.

The government pension office will then invest the additional contributions into company T-bills or short-term fixed-income instruments where the yields are guaranteed and the risks are relatively low. When the account matures and yields money, everyone who pitched into the account will get profits based on their Flexi Fund contribution.

There are three ways OFWs can greatly benefit from getting a Flexi Fund account:

  1. Premature withdrawal of contributions but with penalties imposed on accounts pre-terminated before reaching an age of one year
  2. Annual incentive benefits, which is a bonus given to accounts that do not make a full withdrawal within a year
  3. Retirement, disability, and death benefits that can be disbursed in either lump sum or monthly pension

If you’re an OFW and you’re interested in opening a Flexi Fund account, you can download the enrollment form from the SSS website, fill it out, and submit it to the nearest SSS representative office in your country along with your overseas employment certificate. Once your account has been successfully created, you can start with your contributions to your account.

Still on the fence? In 2014, the rate of 91-day short-term treasury posted by the Bangko Sentral ng Pilipinas was 1.244 percent. For 2017, the average interest rate of the same T-bills was 2.147 percent. That’s exponentially better than merely leaving your money in a savings account.

3. Modified Pag-IBIG II Savings Program

Also known as MP2, the Modified Pag-IBIG II scheme is a pure savings program offered by the Pag-IBIG Fund for its members.

Unlike your usual monthly contributions, the MP2 is an accelerated savings program that’s designed to act like a time deposit account but with the funds deducted monthly instead of a one-time initial investment.

According to Pag-IBIG Fund president and CEO Acmad Rizaldy Moti, the MP2 is better than putting your money in a bank account or even other investment vehicles because your money will not be in the red. Even if the program doesn’t make money, you will still get your investment because the contributions are guaranteed by the government.

(Read:  Pag-IBIG Housing Loan: The Complete Guide To Funding Your Dream House)

“Ang pinagkaiba sa UITF, kasi bumibili ka dun sa units, pwedeng yung pagpasok mo, pag-invest mo sa isang mutual fund, pwedeng over the years, mas mababa ang makukuha mo. Sa Pag-IBIG fund, worst case scenario, zero ang kikitain ng pera pero yung principal na pera natin ay laging nandyan,” Moti said.

While the MP2 has a higher yield than the Pag-IBIG I membership program, the dividend rates vary from time to time. For instance, if you decide to enroll in the MP2 program and you put in P500 in your account for the next 60 months, you can get around P34,000 when your account matures and become ready for withdrawal. If you’re not satisfied with the yield, you can extend the term to 10 years and you’ll get better interest rates.

To start with your MP2 account, just go to the Pag-IBIG Fund website and go to the Modified Pag-IBIG II Enrollment website. Enter your membership ID (Pag-IBIG MID) number, name, and date of birth. The system will automatically enroll your account to the scheme and the payments will be deducted from your salary.