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Navigating the changes in the Philippine retirement benefit landscape

The Philippine retirement benefit space has been static since the enactment of the Retirement Pay Law under R.A. 7641 three decades ago. Thus, retirement benefits introduced in the market are predominantly defined benefit in nature where benefits are based on a predetermined formula. In fact, the benefit under the Retirement Pay Law is equivalent to a month's pay for every year of service.

However, in the last decade or so, companies have been slowly migrating their traditional defined benefit plans to defined contribution or hybrid plans to be more competitive in the market.

These changes in the retirement landscape can be noted based on emerging trends, proposed legislative changes and financial wellbeing priorities of both employers and employees.

What's new in the Philippines?

The retirement benefit landscape has changed dramatically and its evolution toward more cost-effective solutions is ongoing. The following resources provide employers with an insightful perspective into the Philippine environment and the trends we’re tracking.

Regulatory transformation

The enactment of RA 7641 three decades ago was a milestone in retirement planning for the private sector. The law provides for a compulsory payment of the minimum amount of retirement benefits for qualified retirees. The proposed HB 9343 marks yet another milestone with the shift towards a retirement system that is fully funded and portable.

Supporting employees' financial goals

Globally, COVID-19 has caused 70% of employees to grapple with new financial concerns. Assisting employees to manage and maintain their physical, emotional and social health and increase their finances has become a priority for companies everywhere. The pandemic has tested wellbeing for both employers and employees and many employers are now turning their attention to how financial wellbeing fits into their wellness strategy and benefit program delivery.

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