5 Best Retirement Fund Plans in the Philippines (2024)

The optional retirement age in the Philippines is 60 while thecompulsory retirement age is 65. Do you really want to work that long or, worse, for the rest of your days? You will reach a point in your life when you just want to enjoy the fruits of your labor—traveling the world or retiring in a bright beach house or enjoying your quiet empty nest in a condo.

That desire to stop working does not depend on how old you are—but your retirement fund does. You may want to stop working at 40 or 50 and can actually afford to do so; or you may still have to work beyond 65 because you neglected financial planning and your retirement fund is not enough.

When should you actually start your financial planning for retirement? The quick answer is now. But let’s hear it from the Bangko Sentral ng Pilipinas (BSP) as it weighs in: “Retirement planning at an early age facilitates better decision-making for your career, families, and loved ones as there is an assurance of financial security when you retire.”

Financial planning is very important, especially when you have a family, while you’re still earning a steady paycheck. Here are five of the best retirement fund methods you can use to ensure a comfortable life after 60 or earlier!

1. Pension plans

Pension plans provide you with monthly allowances or a whole lump sum amounting to your total contributions. One of the most accessible pension plans in the Philippines is facilitated by the Social Security System (SSS) or GSIS for government employees. This is considered as one of the easiest ways to invest since SSS contributions are mandated by law, and are automatically deducted from your salary.

SSS defines lump sum payment as equal to the total contributions paid by the member including interest earned. Other institutions like banks and insurance companies also offer a variety of pension or retirement plans.

2. PERA

The Personal Equity Retirement Account (PERA) was fully implemented by law in 2016. According to financial analysts, this is the Filipino counterpart of the 401k Contribution Plan or the Individual Retirement Account (IRA) in the United States. PERA is a type of retirement investment plan that can only be availed through banks, insurance companies, or any other administrator accredited by the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission, and the Securities and Exchange Commission (SEC).

PERA is a voluntary retirement contribution plan that gives you the freedom to save and invest up to P100,000 annually; married individuals can contribute P100,000 each; OFWs can contribute up to P200,000. Also, the returns are completely tax-free. PERA contributions may be withdrawn when you reach the age of 55 and having made qualified contributions for at least 5 years (55 and 5 rule) in lump sum or monthly pension. Or upon death, regardless of age or contributions made. If you withdraw early, your contributions will be subjected to penalties, meaning all taxes waived will be repaid to the BIR.

3. Investment-linked insurance plans

Financial planning is also protection planning. Investment-linked life insurance provides protection for you and your family in case the unforeseen happens—while growing your hard-earned money. FWD Life Insurance, for instance, has plans that will address your protection and investment needs: life insurance, investment, and accidental death.Options to consider are FWD Manifest, which grows your wealth by providing unique bonuses and rewards for investing more for longer, and FWD Set for Life, which grows your money and protects you until age 100.

4. Investment funds

Banks, insurance companies, and other institutions offer a variety of funds already invested in a diverse set of industries. Bonds, stocks, and other investments can be quite complicated but these institutions can help you or do the financial planning for you with their fund managers who will invest and oversee your portfolio. Some insurance companies, like FWD, even offer funds with returns in US dollars.

5. Real estate

Owning a home or any property by the time you turn 50 or 60 is one of the main goals of Filipinos, and for good reason. It’s an investment that makes sense, especially if you can no longer rely on a monthly income for rent. The value of your house or condominium unit appreciates as the years go by, especially if you have chosen a good location. In addition, your property that can eventually be rented out to give you a source of income once you have retired.

Experts say that the key to long-term financial wellbeing is to invest in more than one plan or a combination of any of the best retirement savings plans on the list.An FWD financial advisor can help you strategize, identify your appetite for risk, and achieve financial wellbeing in time for your retirement. Schedule a free session today!