The Capital Market Development Council chaired by Finance Secretary Carlos Dominguez III is considering reforms in the corporate pension system, including the recommendation by the Fund Managers Association of the Philippines to require the partial or full funding requirement of retirement plans for private sector workers.

Dominguez said over the weekend the council consulted the Department of Labor and Employment on FMAP’s recommendation. He said the recommendation would help provide sufficient funds for the pension or retirement plans of private sector workers while boosting the demand for investments that could contribute to the growth of the Philippine capital market.

“This is to reduce fiscal risk in the system as country ages over the longer term and also as an ancillary measure to make pensions more portable. As a fully-funded and portable product, encouraging the adoption of PERA [Personal Equity and Retirement Account] accounts helps increase funding levels, but increased funding over the broader pension system [similar to the popularity of the 401K product in the US] is similarly desirable,’ Dominguez said.

“Promoting the more widespread adoption of PERA beyond their use as a tool to satisfy the Retirement Pay Law [RA7641] is also meant to augment average retirement incomes in the Philippines, which are currently insufficient to replace worker incomes,” he said.

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