Many Pinoy expats, including myself, often fail to maximize government benefits when we start working abroad. We often discount programs in the Philippines thinking that:
- Since we’re no longer in the Philippines, the benefits will not help us in our new country
- The benefits are too small compared to our new increased income
- The benefits are not worth the bother
Nothing can be further from the truth.
The way I see it, many Philippine government benefits designed for OFWs, when taken all together and with proper planning, can help us achieve our financial goals faster. Click To Tweet Yes, not one of these programs will make us rich or guarantee that we’ll be set for life when we come back home.
But when we take them all together, these can help secure your financial future.
Each of the programs I will feature in this article are mutually-reinforcing, meaning they help other programs in this list become more effective.
First of all, when I say expat, I mean this:
I hope that’s clear.
How to Maximize Government Benefits as a Pinoy Expat
First, I would like to point out that we would need to put in some elbow grease to take advantage of these programs. You’re lucky if you live in a country where they send agency representatives from SSS, Pag-IBIG, or PhilHealth to attract members.
But if you live in a country where there are no reps, you either have to apply via email, which can be confusing sometimes, or process your applications when you visit the Philippines. Then you would need to set automatic payments with your bank to make sure that you’re always current with your accounts.
In any case, I’m sure you’re already aware of the programs listed below but please stay with me here. I will highlight why I think Pinoy expats should take advantage of these benefits. My observations are informed by my personal experiences as a Filipino worker abroad.
1. Secure your family’s health with PhilHealth
Nothing makes Pinoy expats worried more than a medical emergency back home. For many of us, the idea of not being able to send money when we receive calls from family members asking for help to pay for medical emergencies and hospitalization is the stuff of nightmares.
On the flip side, nothing worries the families of expats back in the Philippines than the thought of their loved ones living abroad sick, alone, and unable to afford their medical bills.
Back home, all employees and many unemployed people make sure that they subscribe to PhilHealth to get substantial discounts when they are hospitalized. We’re already aware of the many benefits we reap as PhilHealth members while in the Philippines.
Not many know though, that we can also take advantage of PhilHealth while working abroad.
PhilHealth benefits for Pinoy expats
What are the PhilHealth benefits for Pinoy expats and their families?
- Family members/dependents back in the Philippines continue to be eligible to the same benefits as principals.
- Apart from the usual coverage for hospitalization and outpatient surgeries while in the Philippines, OFWs are entitled to reimbursement when they are confined abroad.
- Those who have reached the age of retirement and have paid at least 120 months’ contribution are automatic Lifetime members of PhilHealth.
Being able to avail of PhilHealth benefits for my dependents is already a great incentive to continue being a member. But being entitled to reimburse my possible confinement abroad clinched the deal for me.
Some of us already have health insurance benefits from our employers. However, many of our countrymen abroad do not enjoy the same privilege. In any case, even if you already have health insurance, I still recommend that you get PhilHealth for your dependents and for when you go back home for good.
A PhilHealth membership will help you reduce the amount of money to allocate or spend towards medical fees and hospitalization. You can funnel that money to your savings or investments instead.
2. Prepare for the worst with OWWA
When we’re starting the next phase of our lives and careers by accepting a job abroad, the farthest things from our minds are the possibility of being maimed or dying prematurely. Unfortunately, based on my extensive experience, shit happens. People are maimed or killed while working abroad. Sometimes, war breaks out.
We don’t think about these possibilities because we believe we’re going to summon bad energy just by thinking bad things, Beetlejuice-style. Well, not thinking about something will not make it go away. We have to be prepared for any eventuality.
To get to the point, make sure that you’re current with your OWWA membership in case you are maimed or killed while working abroad.
- Disability/dismemberment benefits of up to P100,000 for injuries sustained due to accidents while working abroad
- P100,000 in case of death by natural cause, to be received by your legal heirs
- P200,000 in case of death due to accident, to be received by your legal heirs
- P20,000 for funeral expenses, to be received by your legal heirs
- Bringing the body/human remains of the OFW back to the Philippines
- Repatriation in case of political unrest or natural calamities
The shipping human remains back to the Philippines, depending on where you are in the world, costs thousands of dollars. Additionally, in the case of your death, OWWA will help your heirs claim any insurance and other social benefits that you have through your employer, if you are eligible.
If the worst happens, at least your family will not be saddled with debt in trying to bring you back home. Yes, I know this sounds macabre but it’s better to be prepared than not. You may be thinking bad stuff won’t happen to you. Hopefully you’re right. But what if you’re wrong? Wouldn’t you rather be prepared?
Make sure that you renew your OWWA membership every two years.
3. Fund your mid-term savings through Pag-IBIG MP2
The next three programs are among my favorite ways to maximize government benefits in the Philippines. These will help you grow your money and prepare for retirement. These are also relatively easy to understand.
So onto the Pag-IBIG MP2 scheme.
Pag-IBIG MP2 is a voluntary savings program that allows Pag-IBIG members to contribute and get their money back in 5 years, renewable for another 5 years, with profits. This means you can keep your money in a safe investment vehicle within a reasonably long period.
Personally, I think this is a great way for us to save for our mid-term goals like saving for: college, house down payment, wedding expenses.
Here’s how it works:
- You have to be a Pag-IBIG 1 member. Pag-IBIG 1 is your regular Pag-IBIG membership. If you’re employed in the Philippines, you’re automatically a member. If you’re abroad, you would need to apply to be a member first and make Pag-IBIG 1 contributions. Only then you can apply for Pag-IBIG 2. Capisce?
- Apply for Pag-IBIG 2 membership with your Pag-IBIG Fund Services Member Services Desk. There are approximately 22 representatives in Asia-Pacific, Europe, North America, and the Middle East.
- Contribute at least P500 every month for 5 years.
- You can renew or continue your investment for another 5 years.
The money grows through an annual dividend rate set by Pag-IBIG administrators. So far, the published dividend rate are as follows, based on various press releases by Pag-IBIG:
Pag-IBIG MP2 Dividend Rates
Not too shabby eh? Of course we will assume that we will contribute waaaaaay more than the minimum amount.
The dividends are not distributed to members. These are kept in the fund until you withdraw your money at the end of the 5 or 10 year period.
It might be too low for people with high-risk appetite. But for many of our fellow expats who are eager to save and preserve the value of their money with the least risk possible, MP2 is a great idea.
My only beef with MP2 is that there is no transparency with the way administrators determine the dividend rates.
Everything’s all fine and rosy now that the dividend rates are high, but what’s going to happen if the rate suddenly dips and people complain? I hope Pag-IBIG administrators become more transparent with their methods and issue annual reports.
They are accountable to members after all and we deserve to know how our money are being invested and used.
4. Invest for your retirement with PERA
For me, the implementation of PERA or Personal Equity Retirement Account at the end of 2016 was one of the most exciting events in the Philippines that people overlooked.
I also think that investing in PERA is one of the key steps we can take to achieve a total money makeover in the Philippines and avoid being a burden to your families in old age. I outlined the reasons why you should have a PERA account in this post.
To put it simply, PERA will allow Filipinos, both at home and abroad, to invest in TAX-FREE vehicles for retirement provided that they follow some guidelines.
- Philippines-based contributors can invest up to P100,000 annually
- OFWs can invest up to P200,000 annually
- Contributor can enjoy tax-free status as long as they withdraw after the age of 55 and has contributed for at least 5 years
Again, I have to emphasize that PERA is tax-free. People don’t seem to understand the implication of not having to pay taxes on your long-term investments.
There are very few ways for us regular people to avoid paying taxes on our investments, and that includes investing in PERA. (If you know of another way feel free to let me know. Seriously. ;))
There’s a reason why rich people do everything they can to avoid paying taxes, including paying expensive accountants and lawyers.
Let’s take for example, a 35-year-old Pinoy expat who wants to maximize government benefits by contributing to PERA. If they want to retire at the age of 55, their investments have 20 years to grow. They don’t have to pay capital-gains tax for their investment, which compounded and grew for 20 years. Imagine how much money they get to keep instead of paying taxes.
Is PERA for everyone?
I really want to think that PERA is for everyone. After all, all of us want to have a comfortable and well-funded retirement. But, PERA is not for you if you:
- Do not have an emergency fund with 3 to 6 months’ worth of expenses.
- Have no mid-term savings or investments.
- Cannot control yourself from cashing in before the age of 55.
PERA is for you if you:
- Already have a fully funded emergency fund.
- Can wait until after the age of 55 or older to cash in on your investment.
- Want to have a comfortable and fully-funded retirement.
The next time you’re in the Philippines, apply for a PERA account. Unfortunately, only BPI and BDO offer PERA accounts and you have to physically appear in their offices to open them. But I’m hoping that changes soon as the number of people who invest in PERA grow.
5. Supplement your retirement pension with SSS Flexi Fund
Still, there are people who cannot bring themselves to invest in a vehicle with such a long time horizon required by PERA. That’s fine, you and I are different.
Good thing, there is another opportunity for you more conservative folks to maximize government benefits towards retirement.
Enter the SSS Flexi Fund.
What is SSS Flexi Fund and why I should invest in it?
The SSS Flexi Fund allows Pinoy expats to invest in Philippine treasury bills. This scheme is open only to those who are based abroad.
Here’s how it works:
- First, you have to be a member of SSS and pay the maximum contribution of P1,760.
- Register as an OFW with SSS either in a branch or online.
- Contribute at least P200 above the maximum contribution.
That’s basically it. Of course, as with MP2, we will assume that we will continue to maximize our benefits by contributing waaaay more than the minimum.
You don’t have to do anything special when making contributions. Just deposit or transfer the amount you want on top of the maximum contribution. Say for example, you want to make a monthly contribution of P1,000. Just pay or transfer P2,760 to SSS. Simple.
So why you should invest in SSS Flexi Fund?
- As I said, it’s tax-free.
- Investment yield or growth is transparent since the Bangko Sentral ng Pilipinas publicizes T-bill rates. Here are the rates from 2014 to 2018.
- It is virtually risk-free because it is backed by the Philippine government.
- Unlike PERA, SSS Flexi Fund can be withdrawn in full without penalty as long as you are invested in the scheme at least 12 months.
Are there any downsides to the Flexi Fund?
- There is a 1% management fee.
- Depending on your risk appetite, the gains may be too low for you.
- If you’re paranoid, yes, there is a possibility that the fund’s value could decrease.
But if the Philippine government can no longer pay the interests on the t-bills it issues then we have a bigger problem than the diminishing value of our investments. It’s probably time to build a bunker or learn how to forage or something.
How will it benefit me?
The SSS Flexi Fund can supplement the retirement benefits we get upon retirement. It can also be a great way for you to preserve the value of your money. As for myself, I will be using SSS Flexi Fund to hide a portion of my emergency fund.
6. Educate your dependents with the help of TESDA and OWWA
Among the major reasons expats cite why they want to work abroad is to save up for their kids’ or siblings’ college fees.
Why not take advantage OWWA scholarships for OFW dependents? In 2017, there were 6 slots per province available. The scholarship is not automatic, mind you. The students have to apply and be selected by a committee. BUT, it cannot hurt for our dependents to apply for scholarships. That’s still free money in exchange to the effort of applying.
How much will be awarded to the dependents of OFWs?
- A maximum of P60,000 per school year towards a 4 to 5 years course in any college or university.
- Maximum of P20,000 assistance per school year leading to a baccalaureate or associate degree in any college or university. This is applicable to those of us who have a monthly salary of not more than US$400.
- For deceased OFWs, their dependents are eligible for the following educational support: P5,000 for elementary; P8,000 for high school; P10,000 per school year in college; P15,000 livelihood assistance for the surviving spouse.
TESDA also provides short-term training programs for OFWs and their dependents for a maximum of P14,500 per course leading towards a vocational or technical course in any TESDA-accredited school. This is only available if your OWWA membership is current.
Another reason to make sure that your OWWA membership is renewed every 2 years.
How to start maximizing government benefits?
I really think that all expats whether high or low income, should take advantage of all the available government benefits and maximize them.
Of course, maximizing these benefits is not easy and can be time-consuming. Here’s a quick guide to get you to the right direction:
- Prioritize PhilHealth and OWWA membership. You’ll never know what’s going to happen to our health and it’s best that we are covered.
- If you live in a country with an SSS representative assigned, meet with them to sign up for a Flexi Fund.
- Same way with Pag-IBIG.
- If you don’t have access to SSS and/or Pag-IBIG representative, consider applying via email or in person when you go home to the Philippines.
- Once you have the opportunity to come back home to the Philippines for a visit or break, make time to go to either BPI or BDO to apply for a PERA account.
So there you have it. I hope you’re still with me until the end.I hope that this post inspired you to maximize government benefits that we sometimes overlook. We're basically leaving money on the table if we ignore these government-sponsored benefits. Click To Tweet
With a little bit of planning, these benefits can help us achieve our financial goals sooner.
Do you have suggestions or tips on how to maximize government benefits as a Pinoy expat? I’m eager to hear your ideas and experiences.
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