Newly appointed Department of Finance (DOF) Secretary Ralph G. Recto said he will push for the passage of a law that will develop a sustainable corporate pension system in the country and reforms in public and private pensions.

Recto said that he will advocate for the Capital Markets Development Act, which aims to expand investment options for pension account holders and open up the country to foreign capital.

The bill, which was approved in May 2021, was transmitted to the Senate and has been pending at the committee level since June of the same year.

Its objectives include promoting and encouraging national savings and prudential investments on the part of employees, stimulating the development of the capital market, and contributing to the desired economic growth of the country.

Among its provisions is the establishment of a private retirement and pension system that is fully funded, portable, more actuarially fair, and stable which will enhance the current pension.

The bill aims to set up an Employee Pension and Retirement Income Account where contributions will be made by both employers and employees, allowing employers to pre-fund their pension liabilities and employees to start building up their savings throughout their employment.

Currently, the country’s current pension system relies mainly on the Social Security System for the private workers, and the Government Service Insurance System for workers in the government.

In addition, there are also services such as the provident-type Pag-Ibig Fund that provides housing loans, and certain senior citizens’ benefits, which include a 20 percent discount on their purchases.

As per the law, private employers can establish their own retirement plans, with certain tax exemptions, as a supplement to SSS benefits. however, this is not mandatory.

Further, in the current corporate pension system, employees can only start benefiting from their retirement funds at the age of 60, and only their respective final employers contribute to their pensions.