State-owned Land Bank of the Philippines on Monday started offering a high-yield special deposit facility to overseas Filipino workers (OFWs) and their families, aiming to issue about P2 billion worth of 5.5-year securities from this initial tranche.

Land Bank president Gilda Pico said the long-term negotiable certificates of deposit, or LTNCDs, which will be offered until May 16, would help OFWs make the most out of their savings so they would have something to rely on when they return to the country.

"This is like our retirement plan for them," Pico said in an interview.

The LTNCDs carry an annual yield of 7.00 percent, compared with the average of about 5.5 percent in traditional time deposits of the same maturity.

The LTNCDs will be offered in multiples of P20,000, but Pico said a maximum investment of P250,000 was set to make sure that more OFWs and their dependents would benefit from the program.

Since this is a zero-coupon bond, which will be issued at a discount, an OFW will need only P13,699 to buy one unit of LTNCD and end up with P20,000 after five-and-a-half years.

The LTNCD is free of the 20-percent withhold tax on interest on regular deposits. Compared with a regular time deposit, it also carries higher yields because it is subject to a lower reserve requirement of 2.0 percent under central bank regulations.

Investors are required to hold the security until maturity, unlike in time deposits, which can be pre-terminated. But since the LTNCD is negotiable, it can be used as collateral for bank loans or sold to another investor.

Land Bank requires applicants to present documents to prove that they are OFWs or related to OFWs. With editing by INQUIRER.net