Pre-crisis Filipino savings had fallen–ADB

THE pre-crisis savings rate in the Philippines had fallen amid accelerating consumption growth, according to an Asian Development Bank (ADB) report.

In its report titled, “Explaining Filipino Households’ Declining Saving Rate,” the Manila-based lender said the average household savings rate in the country dropped by 5.2 percentage points to about 5 percent of disposable income from 1994 to 2006.

The report also showed that the savings rate declined to 1.7 percent of gross domestic product (GDP) in 2006 from 9.8 percent in 2000.

In 2007, it rebounded slightly to 2.4 percent.

The ADB said the more extensive coverage of the Social Security System (SSS) had reduced households’ precautionary savings.

In 1993, SSS’ compulsory coverage included household helpers earning at least P1,000 a month. In 1995, voluntary coverage was expanded to overseas contract workers and self-employed persons with a monthly net income of at least P1,000.

This was further expanded to self-employed workers and agricultural workers who are not paid any regular daily wage or who do not work an uninterrupted period of at least six months, household helpers, parents employed by children, and minors employed by parents.

“This expanded coverage of the social security system implies a reduced need for younger cohorts to accumulate precautionary savings,” the ADB said.

Besides the developed security system, the ADB said the rising young dependency group would have increased the education and health expenditures, which could result in lower savings.

SSS releases pensions, 13th month bonuses

In a statement, state-run SSS said it released P8.7 billion for December pensions and 13th month bonuses of pensioners, adding that banks were asked to allow withdrawal of their bonuses in the first week of December.

Joel Palacios, SSS spokesman, said the year-end disbursement was seven percent more than the P8.15 billion released in December 2008.

About P8.59 billion, or 98.61 percent of the disbursements, were coursed through the Mag-Impok sa Bangko (MSB) Program, which helps monthly pension releases to ATM accounts of pensioners.

The pension fund also mailed a total of P103.17 million in checks to almost 20,000 pensioners.

SSS provides monthly pensions for partial and total disability, retirement and death. Regular pensions are released depending on the contingency date, meaning a member who retired on July 23 would get SSS retirement pensions every 23rd day of the month. –WITH REPORT FROM LAILANY P. GOMEZ, Manila Times