Friday, June 28, 2013

Entrepreneurial Farmer

Ambrosio R. Villorente


Do you have work where you can retire from? Retirement, I mean here is one’s withdrawal from work, business job. It also means the withdrawal of certain equipment like car from its use.

Among millions of people, retirement is becoming more and more of life dream for workers all over the world.

A chaotic global economy coupled with increased life span is forcing many to stay on the job after the age they dreamed of to retire due to the lack of enough savings.

How will they finance their lives’ expenses after retirement if they have not saved? 

Some politicians once they tasted occupying elective positions dreamed of being re-elected and re-elected. After they have served three continuous terms in the same position, they aspire for another position either in higher or lower level. This is not being due to lack of money saved, but the aspiration to perpetuate themselves with more money and power. They ignore the purpose of the law limiting elective official’s term of office to give chance to others who are equally if not more than able to render public service sans corruption. 

In the Philippines, servant leaders occupying classified positions, the compulsory retirement age is 65 years. But they can retire at 60 years old and receive pension. They can choose what is called “Take All” and no pension. 

The problem with take all is: once all the retirement benefits are fully spent, the retiree is in trouble sourcing money for his normal and decent living requirements. Those who opted for pension will have something coming in cash monthly until they perish.

The employees of private firms can also start receiving pension from the Social Security System at the age of 60 provided they have contributed at least 120 monthly payments prior to their retirement.     

The monthly pension rate is dependent on the member’s paid contributions, the number of years of credited service, and the number of dependent minor children. 

In a study, the Citibank conducted in year 2008, only one (1) out of 10 Filipinos saved for retirement.

After retirement, there is an abrupt change in the day to day activities of retirees. Some have planned activities they will engage in after retirement. However, most retirees have none. This made them stay at home, watching television. They became inactive and they became weak. They became sickly. Some dies early.

In Singapore, its retirement age is 62 years old as provided for in the Retirement Act (RA). However, an employer can mandate retirement age even before an employee reaches 62.
An employer does not pay retirement benefits unless stipulated in the employment contract. Moreover, the employer has the option to reduce up to 10 percent wages and/or fringe benefits and bonuses of employees 60 years or older. This is done if the employer can justify that productivity of an employee performance, duties and responsibilities are reduced.

However, the Singapore government implements the so called comprehensive social security savings plan called the Central Provident Plan (CPP). Under the plan, all working Singaporeans and their respective employers make monthly contributions into three Central Provident Fund (CPF) accounts which are: 

1. Ordinary Account to be spent for specific expenditures like investment, education, and to purchase a home. 

2. Special Account to be spent for the elderly years and investment in retirement-related financial products; and

3. Medicine for medical expenses, hospitalization costs and approved medical insurance.  

In Malaysia, 56 years old for public sector employees retirement age is enforced. Employee is given the option to retire at age 40 years after at least 10 years continuous government service.

Public sector workers have two pension schemes to select from. These include the pension scheme which provides for a monthly fixed income, a service gratuity, and free medical treatment in government hospital. 

The Employees Provident Fund scheme provides for retirement through a mandatory savings account where employees and employers pay monthly contributions. 

For Malaysians working with the private sector, the Malaysian government has a mandatory retirement saving scheme.

It seems that Filipinos and their government are still struggling hard on how to fund life after retirement. /MP 

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