TFT puts the spotlight on the journey of the ‘Kabayan OFW Pension Act’ towards a much-deserved pension plan for OFWs. Here’s all you need to know!
Overseas Filipino workers (OFWs) have found a glimmer of hope in a proposed “unique” pension plan and social security system tailored exclusively for them.
The proposal, House Bill No. 8574 or the Kabayan OFW Pension Act, was filed by Kabayan Representative Ron Salo, who chairs the House Committee on Overseas Workers Affairs.
Salo stated that the bill was crafted in response to appeals from various OFW groups, and these sentiments were echoed in social media comments from OFWs and their families.
The resounding “How to apply?” comments on social media, in response to this news, signify the eagerness of many OFWs to secure membership, although the proposal is still at the bill stage.
Additionally, the majority of comments passionately urge the Philippine government to transform this proposal into a reality – one that would honor their sacrifices and reward their immense contributions to our economy.
In an online interview with The Filipino Times, Salo said: “The bill seeks to establish a social security and pension system specifically catering to OFWs. The system is mandated to craft guidelines for the OFWs’ retirement benefits, monthly pension, death benefits, permanent disability benefits, and funeral benefits.”
“It is also empowered to provide other benefits to OFWs for as long as financially viable. Membership shall be mandatory for all documented OFWs and voluntary for non-documented OFWs,” he added.
Meanwhile, Atty. John Rio Bautista, Labor Attaché in Dubai and the Northern Emirates, commended the filing of the bill. “Any additional social security coverage for Overseas Filipino Workers particularly those that could help them during their retirement as OFWs is a very good initiative and necessary support for its passage should be given,” Bautista told TFT.
In the bill’s explanatory note, Salo said the existing Social Security System (SSS) falls short of providing adequate protection for migrant workers as they reach their later years. Thus, the need for a “unique pension system for OFWs”.
As of June 2021, the number of OFWs who were members of the state insurance program stood at 1.34 million, out of an estimated 10 million OFWs. While it represents an encouraging increase of over 800,000 compared to the same period in 2020, it also sheds light on a concerning reality – a substantial majority of OFWs remain unable to access vital pension benefits upon their retirement.
Pension coverage
The Kabayan OFW Pension Act is designed to cover all registered OFWs in a streamlined retirement plan.
An OFW must be a member of SSS to avail of its benefits. However, these benefits are separate from other government-provided aid for OFWs.
Salo told TFT that the system is similar to SSS, but with one key difference: membership for documented OFWs will be mandatory.
Non-documented OFWs can choose to opt-in voluntarily. Contributions will be deducted from their monthly salary or earnings based on their salary credits, schedule, and contribution rate, with employers also contributing.
“Currently, the SSS allows OFWs to become voluntary members through specific schemes. However, this approach does not fully resonate with the OFW community. Membership of non-documented OFWs, however, shall be voluntary,” the party-list lawmaker said.
Source of funds
To kickstart the initiative, the national government is expected to provide an initial capital of P100 million
Meanwhile, multiple sources of funding have been identified to ensure the sustainable operation of the Kabayan OFW Pension.
Fees collected from both Philippine and foreign recruitment agencies, as well as the Overseas Employment Certificate of the Department of Migrant Workers (DMW), will contribute to the fund.
The OFW Bank’s net income, savings from the Assistance to Nationals Fund of the Department of Foreign Affairs, and the DMW’s Aksyon Fund will also be tapped.
Additionally, grants or bequests from donors will further supplement the fund, creating a robust financial backbone for the proposed pension system.
Long-awaited pension
The bill, according to Salo, stands as a symbol of the government’s commitment to securing the future of OFWs.
“The bill is significant in championing the rights of our OFWs because, in our consultations with OFWs in different parts of the world, it has become apparent that the establishment of a unique pension system for OFWs is one of their most enduring and urgent aspirations,” the party-list lawmaker said.
“The passage of the bill would enable our OFWs to secure social and financial protection in their old age, granting them the dignity and peace of mind they deserve. Thus, the sooner it is passed, the more OFWs will benefit,” he added.
According to the Bangko Sentral ng Pilipinas, cash remittances sent by OFWs reached $2.78 billion in May, a 2.9% increase from the same month in 2022, surpassing the previous record.
The DMW also projected that OFW deployment will exceed the 1.2 million recorded in 2022.
In previous Congresses, legislators from the party-list group Magdalo also introduced bills aiming to establish an OFW pension fund, but their initiatives did not gain sufficient support or momentum.
This time, OFWs are hopeful that Congress will give thoughtful consideration to the Kabayan OFW Pension Act and gain widespread support, finally granting them the rightful pension benefits they have long deserved.
