Connect with us

Hi, what are you looking for?

Economy

Unions pressing for right to opt out of pension contributions

UNIONS said a proposed pension scheme needs to be established on the basis of voluntary worker contributions, saying that deductions from pay could be too burdensome.

The arguments for employer-only pension contributions were laid out in the House Committee on Banks and Financial Intermediaries, which was discussing House Bill 8938 or the proposed Capital Market Development Act of 2021.

The bill calls for all private-sector employees to have an Employee Pension and Retirement Income (EPRI) Account, to which the employer and employee are required to contribute. EPRIs will also be portable, following the worker throughout his working life regardless of changes in employer.

Trade Union Congress of the Philippines Policy and Advocacies Officer Nicole K. Parreño said worker contributions to their pensions should be voluntary as required contributions will represent a further “burden.”

“The contribution on the part of the employee should be made voluntary because they already have to pay for SSS, PhilHealth, and Pag-IBIG. Any additional contributions taken out of their salaries may be too big a burden to bear,” she said.

“We prefer that the contribution be voluntary for workers with extra savings, even if the contribution is quite low at 1% of base salary… they may still feel this is a burden considering the state of the economy,” she added.

According to the substitute bill as it stood on March 22, the initial contribution for those earning minimum wage or less is 0% while the employer pays 4%. For workers above minimum wage, the initial contributions are 1% for the worker and 4% for the employer.

The committee’s chairman, Representative Junie E. Cua, said voluntary contributions will limit the effectiveness of the pension scheme. In the bill’s current form, employers already contribute more than the workers to their EPRI accounts.

“It’s clear under that arrangement, the employee benefits more… if we make one of those arrangements voluntary or make the other compulsory, it will not be fair. The other might request that both arrangements be voluntary and then we won’t have a program anymore,” he said.

The proposed law gives the power to increase EPRI contributions to the Insurance Commission, after consulting the Department of Labor and Employment and the Department of Finance.

Economic managers have touted the bill as holding the potential to raise workers’ retirement packages while helping the development of the capital markets by raising the pool of investible funds. — Gillian M. Cortez

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Investing

A cabinet split is hampering the government’s efforts to deal with the nationwide shortage of lorry drivers that threatens fuel supplies at some petrol...

Investing

Pubgoers are flocking back to their locals, according to figures that drew a cautious toast from the industry but also prompted warnings of fresh...

Investing

Ministers are backing a multibillion-pound plan to build another large-scale nuclear power plant in Britain to ease pressure on electricity supplies as the country...

Economy

The Philippines’ balance of payment position (BoP) hit $1.044 billion in August, the highest in four months, due to increased special drawing rights (SDR)...

Economy

Consumers were less pessimistic in the third quarter as more jobs opened up, but business sentiment turned sour amid a fresh surge in coronavirus...

Economy

The Philippine central bank fully awarded the short-term securities it sold at an auction on Friday, even as rates rose on growing inflation fears....

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Economy

Ivermectin, an existing drug against parasites including head lice, has had a checkered history when it comes to treating COVID-19. The bulk of studies...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Economy

US President Joseph R. Biden, Jr., will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!