Saving habits of OFWs

A STUDY commissioned by Philippine American Life and General Insurance Co. showed an average Filipino overseas worker (OFW) has to work abroad for close to 18.11 years, or 217 months, to be able to save P3 million and return to his family.

The figures are based on the finding that an OFW’s approximate monthly savings and that of his family are P9,658 and P4,142 per month, respectively, or a total of P13,800.

According to the report, 97 percent of OFWs prefer to put their savings in banks although they are aware of other modes of investment, such as, real estate, jewelry, business, car, retirement plans, insurance, dollar funds and memorial plans.

The respondents, 74 percent of whom belong to the 50 to 55 age bracket, believe P3 million is the right amount they need to save before they can quit their jobs.

Their reasons for coming home for good are being able to open their own business, complete their children’s education, and own a car and house.

Demands

They are fearful though that their retirement plans could be marred by sudden illness, job loss, calamities and prevailing poverty.

Judging from the written accounts and interviews of OFWs, saving for the future is one of the most difficult hurdles of foreign employment, the first being physical separation from the family.

The OFWs’ family members, relatives and friends have the mistaken notion they earn a lot and therefore can afford to be generous with their remittances.

The local folks tend to compute OFWs’ salaries in Philippine pesos and, in the process, conclude they are highly or better paid than their local counterpart.

This impression ignores the fact that OFWs have financial needs of their own at their place of work and pay for them in the foreign currency they are paid, not in pesos.

On account of their imagined affluence, OFWs are often looked at as “cash cows” from whom close kin and friends can ask for (and expect to immediately receive) money for real or imagined needs.

With the modern means of communications, OFWs can be nagged, through heart-tugging appeals and other pressure tactics, into cutting back on their personal expenses or taking on extra jobs, or both, so they can meet home-based financial demands.

This makes it difficult for them to set aside a significant portion of their earnings for banking or investment purposes, more so if they are their families’ sole breadwinners or are helping send to school their siblings or relatives.

Splurge

To aggravate matters, when OFWs come home for vacation or personal emergency, they find themselves spending more than necessary during their stay.

It is not uncommon for returning OFWs to be coerced by relatives and friends into “sharing their wealth” by treating them out or buying them expensive gifts.

Unless the OFW concerned does not mind being called a cheapskate or be ostracized, he is often obliged to spend money he has otherwise set aside for saving or investment to satisfy the caprice of his exploitative relatives and friends.

At the flip side are OFWs who, in their desire to enjoy their three minutes of fame in their family circle or neighborhood, have no qualms about blowing their hard-earned money on pricey gifts and lavish celebrations.

The excuses often given for this behavior are, it happens only every two or three years, there is nothing wrong with enjoying the fruits of their labor, and it’s there way of making up for the years they were away from their relatives and friends.

So by the time the OFW is due to return to work, he finds himself practically penniless and forced to borrow from money lenders at usurious rates. This obliges him to work overtime to meet his outstanding financial obligations and make up for the extra expenses he incurred while on home leave.

Retirement

In an effort to encourage saving for retirement, especially by OFWs, Congress enacted in 2008 Republic Act No. 9505, or the Personal Equity and Retirement Account Law.

Patterned after the United States’ Roth Individual Retirement Arrangement, the law created a retirement savings program where the participants’ contributions are pooled and invested in various investment instruments by a financial institution accredited by the government.

If a contributor has contributed the prescribed amounts for at least five years and reached age 55, he can withdraw his money together with its earned increments without paying income tax.

The government gave the law a lot of hoopla after its enactment and promoted it as an ideal retirement nest for ordinary wage earners and OFWs in addition to the Social Security System and Government Service Insurance System.

All that hype came to naught because the law’s Implementing Rules and Regulations were approved only in October 2009 and the covering Bureau of Internal Revenue regulations came out and took effect in 2012.

It is doubtful if the government agencies tasked with looking after the OFWs’ interests—the Philippine Overseas Employment Authority and Overseas Workers Welfare Administration—have made serious efforts to inform OFWs about the law and encourage their participation in its program.

Noticeably, the government regulatory agencies tasked with implementing the law have not released any report on whether or not the purpose for which the law was enacted has been accomplished.

The country’s so-called modern heroes would just have to fend for themselves when retirement day comes.

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