OFWs and retirement | Inquirer Opinion

OFWs and retirement

/ 04:06 AM November 09, 2020

Filipinos living or working abroad sent home an average of $2.8 billion (P136 billion at current exchange rates) a month to their families in the Philippines last year. Even during this pandemic, the amount remitted by overseas Filipinos still exceeded $2 billion a month.

Of the estimated 10 million Filipino expatriates, 2.2 million are contract workers. It is estimated that about 12 percent of Philippine households depend on the remittances of OFWs. However, Bangko Sentral ng Pilipinas data show that OFW households invest only 5.2 percent of these remittances. The bulk of the money sent back home by OFWs goes to the usual expenses such as food, shelter, and education.


However, quite a number of Filipino families also have a penchant for a little extravagance while the money is flowing in. Why buy a townhouse when they can borrow to buy a house and lot? Why settle for a small car when a bank loan can purchase an SUV? When jobs are lost — as is the case now because of the COVID-19 crisis — many such OFWs end up going back home to a load of debt.

Given the difficult economic times, Filipino workers — especially OFWs whose jobs abroad are at stark risk of being cut short or lost for good as countries adjust to the health and economic impacts of the still open-ended pandemic — must have to rethink how they should spend their money. It’s time to set priorities, and one such item to be considered is retirement, or preparing for such an eventuality.


They can look at the webinars being conducted by the Bangko Sentral, which is exerting much effort to entice OFWs to invest a bigger portion of their earnings in pension funds that will prepare them financially for retirement.

The process of investing is much easier now, as many of these investment instruments have become available digitally. Together with the Philippine Trade and Investment Center (PTIC), the Bangko Sentral conducts online briefings specifically about the Personal Equity and Retirement Account (Pera) scheme, which aims to target large overseas Filipino communities.

However, since its launch in December 2016, Pera remains underutilized, with only 1,586 Filipinos availing themselves of the scheme as of July this year, with total contributions of just P137 million. Worse, only 273, or 17 percent, were OFWs.

“These figures remain regrettably low,” said Bangko Sentral Governor Benjamin Diokno.

Workers can also prepare for retirement through the PTIC’s Trabaho, Negosyo, Kabuhayan (TNK) program. The TNK is a joint initiative of the Department of Trade and Industry through PTIC and the Department of Labor and Employment that aims to increase opportunities for decent work and livelihood especially for OFW households.

Since 2017, it has focused on seminars in the provinces, tackling the benefits of entrepreneurship as well as the different business models that OFWs can consider, such as franchising, startup ventures, e-commerce, and agri-tourism. There are now more than 1,000 DTI Negosyo Centers set up all over the country to help OFW households who are on the lookout for new business ventures.

There are also other ways to grow one’s money. Local banks usually offer tips on how OFWs can jumpstart their goal of securing their future. Topping the list is to start saving and investing now. Banks have an online presence that OFWs can easily access for guidance on where to invest their money, from the simple time deposits to complex schemes such as the newly launched real estate investment trust companies.


Unit investment trust funds (UITF) have also been a good long-term investment for those seeking an affordable way to save and invest regularly. UITFs are money pooled from clients and then invested by professional fund managers in investment outlets that are normally inaccessible to retail investors. Mutual funds work basically in the same way.

On the other hand, there are things that OFWs need to avoid when it comes to investing. Promises of extremely high returns, for instance, especially those from internet-based pyramiding schemes that lure investors with high profits if they recruit others to invest as well, should be taken with healthy skepticism. Stories of ordinary Filipinos scammed of their hard-earned money through such schemes abound, and should offer cautionary lessons on not trusting promises of easy money too easily, if at all.

At the end of the day, OFWs have to think long and hard about their future as well as those of their families’. The overseas job market has entered a period of instability that may take time to recover, so drawing up a contingency plan is paramount. There are a lot of opportunities available to help them begin saving more consistently and investing more wisely to secure their future. The key is to start now.

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TAGS: Editorial, investment opportuities, OFW overspending, OFW remittances, pension funds
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