Pension Fund System Case Study

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According to a comparative study by Balaba (2007) on international pension systems, the best practices of an effective pension fund system should be centered around attributes of good governance, transparency, social responsibility, and accountability. Among the aforementioned characteristics, accountability, or the lack thereof in the system, illustrates that the system is not adapting to the currents needs and current trends of the system. Accountability pertains to ensuring that the governance structures are effective by creating compatible incentives that are also responsive to the needs of the pensioned individuals (Charlton, Roger and McKinnon, Roddy 2011). Various sources have proven that the current pension system does not adapt to the…show more content…
It must be known that both SSS and GSIS pensions are not periodically adjusted to the commodity price index as well as to wages, while those of the judiciary and uniformed personnel are automatically adjusted more frequently according to increases in salaries of active personnel (Manasan, Rosario 2009). In a study on intergenerational equity in the Philippines by Rydell (2005), it was identified that there is need for just treatment for successive cohorts such as by ensuring that tomorrow’s retirees get pensions that are adaptive to the current cost of living. In other words, the system of giving benefits to the next generation must be responsive to their future needs and must not remain stagnant, which is the case with the current system employed by pension-providing bodies like SSS which provides for a steady flat rate of benefit. For instance, SSS has the following benefit computation: (1) the sum of P300 plus 20 percent of the average monthly salary credit

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