Overseas Filipino Workers Retirement System Act

TWENTIETH CONGRESS OF THE 25 JUL -3 P3:42 REPUBLIC OF THE PHILIPPINES First Regular Session SENATE S. B. No. 69 Introduced by Senator Rodante D. Marcoleta AN ACT ESTABLISHING THE OVERSEAS FILIPINO WORKERS SOCIAL SECURITY AND RETIREMENT SYSTEM, AND APPROPRIATING FUNDS THEREFOR EXPLANATORY NOTE Overseas Filipino Workers (OFWs) play a significant role in revitalizing the nation's economy, with their remittances contributing as much as 20% to the gross domestic product. In 2024, remittances represented 8.3 % of the country's Gross Domestic Product with over USD $38.34 billion in remittances back to the Philippines, marking a 3% increase from the USD $37.21 billion recorded in 2023.2 According to the World Bank, the Philippines ranked fourth among the top remittance-receiving countries in 2024. Thus, OFWs are often regarded as the modern- day heroes of the country due to their remarkable contribution to the Philippine economy. However, despite their enormous share at present to our economy, their future remains uncertain as they enter their later years and approach retirement. Currently, the Social Security System (SSS) program for OFWs is voluntary and offers limited pension benefits, which are only accessible upon reaching the age of 60. There is no legislation that allows OFWs to receive retirement benefits at an earlier age or to access voluntary separation pay. Unlike regular SSS members, the employment of 'Personal Remittances Reach a Record High of US$3.7 Billion in December 2024 2OFW Remittances in the Philippines Hit Record USD $38.34 Billion

an OFW is contractual and typically for a short duration. Many OFWs, such as domestic and construction workers, face difficulty in finding reemployment after the age of 45, while performing artists often struggle to secure work past the age of 35. It is therefore unrealistic for these workers to wait until the age of 60 to claim their pension benefits under the current SSS program. In this regard, OFWs deserve to receive appropriate benefits and greater security once their employment comes to an end. The existing framework calls for substantial reforms to address the plight of our unsung heroes of today. This bill seeks to establish a retirement system that will provide OFWs with the financial means to invest in a business or pursue other productive ventures once they decide to retire or separate from their employment. This measure shall establish the Overseas Filipino Workers Retirement System which will provide retirement benefits and welfare assistance to OFWs and their dependents. In view of the foregoing, the approval of this bill is earnestly sought. ним RODANTE D. MARCOLETA

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL -3 P3:42 First Regular Session SENATE R601 S. B. No. 69 Introduced by Senator Rodante D. Marcoleta AN ACT ESTABLISHING THE OVERSEAS FILIPINO WORKERS SOCIAL SECURITY AND RETIREMENT SYSTEM, AND APPROPRIATING FUNDS THEREFOR Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Overseas Filipino Workers

Retirement System Act."

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to

protect and promote the welfare of overseas Filipino workers. Towards this end, there is a need to pioneer and develop innovative means to provide incentives designed to uplift their standard of living as well as those of their families.

Sec. 3. Definition of Terms. - For purposes of this Act, the following terms shall

mean: a. Beneficiaries refers to the dependent spouse of an OFW, his dependent children, whether legitimate or illegitimate, who shall be the primary beneficiaries; or in their absence, the dependent parents; or in the absence of the foregoing, the person designated by the OFW; b. Dependent refers to the legitimate. legitimated or legally adopted child who is unmarried, not gainfully employed, and not over twenty-one years of age, or over twenty-one (21) years of age but is incapable of self-support due to a physical or mental deformity or condition; legitimate spouse dependent for support upon the employee; and the legitimate parents wholly dependent upon the covered employee for regular support; C. Employer for the purposes of this Act, may refer to the OFW's direct employer, the foreign recruitment agency (FRA), the Philippine recruitment agency, or the manning agency as determined by the Department of Migrant Workers (DMW);

d. Non-documented OFW refers to an overseas Filipino worker who does not have valid contract of employment nor possesses the necessary documents to work abroad; e. Overseas Filipino Worker (OFW) refers to a Filipino citizen with a valid contract of employment outside the Philippines through a legitimate agency or employer and who possesses the necessary documents to work abroad.

Sec. 4. Overseas Filipino Workers Social Security and Retirement System. - To

carry out the purposes of this Act, the Overseas Filipino Workers Social Security and Retirement System, herein referred to as the "System", is hereby established which shall cover all documented OFWs who are duly registered with the DMW.

Sec. 5. Objectives. - The System shall have the following objectives:

a. Provide retirement benefits and welfare assistance to OFWs and their dependents; b. Develop a savings pension plan to which OFWs can contribute part of their earnings in order to protect them against the risks of old-age, disability, sickness, death, and unemployment; C. Ensure the viability of the funds of the System; and, d. Establish a trust fund which will constitute for the contributions of OFWs. The system shall endeavor to strike the right balance in the management and safekeeping of the funds remitted by OFWs while extending the benefits of the System to the OFW beneficiaries.

Sec. 6. Board of Trustees. - The System shall be administered by a Board of

Trustees, hereinafter referred to as the "Board", which shall be composed of the following members: a. Secretary of Migrant Workers, as the ex-officio Chairperson; b. Secretary of Finance, as the ex-officio Vice Chairperson; C. Administrator of the Overseas Workers Welfare Administration (OWWA), as ex- officio member; d. Director of the System; e. one (1) representatives from the land-based overseas workers; f. one (1) representatives from the sea-based overseas workers; g. one (1) representative from the manning agency sector; h. one (1) representative from the recruitment agency sector; and, i. one (1) representative from the actuarial or finance industry. The representatives of the land-based overseas workers, sea-based overseas workers, manning agency, and the recruitment agency shall be appointed by the President upon the recommendation of their respective organizations. They shall be of known competence, probity and integrity. The DMW shall transmit to the President the recommendees of their respective organizations.

The representative from the actuarial or finance industry shall be appointed by the President upon recommendation of the Governance Commission for Government-Owned or Controlled Corporations (GCG), and must be of recognized expertise in any field of social security, pension fund, insurance, investment, banking and finance, or actuarial science, and with at least ten (10) years of managerial or leadership experience. The Director shall be appointed by the President and shall serve as the Chief Executive Officer of the System. Must be a person of known competence, probity, integrity and recognized expertise in social security, pension fund, insurance, investment, banking and finance, or actuarial science, and with at least ten (10) years of managerial or leadership experience. The term of office of regular appointive members of the Board shall be three (3) years, which can be extended for another term of three (3) years: Provided, That they shall continue to hold office until their successors have been duly qualified and appointed. 14 All vacancies, prior to the expiration of the term, shall be filled for the unexpired term 15 only. The compensation, per diems, allowances, and incentives of the appointive members of the Board shall be in accordance with and subject to the GOCC Governance Act of 2011 or Republic Act No. 10149.

Sec. 7. Powers and Functions of the Board of Trustees. - The Board of Trustees

shall have the following powers and functions: a. Provide strategic leadership, guidance and direction to the System; b. Formulate and adopt measures to ensure the attainment of the System's mandate, objectives and purposes; C. Determine and fix the monthly contribution of the OFWs and their employers; d. Determine the benefits that will be received by the members, which shall be proportionate to their contributions; e. Determine and approve increases in contributions and benefits of members; f. Issue rules and regulations to carry out the objectives and purposes of the System; g. Approve the organizational structure of the System, including the positions and salaries of personnel, or initiate the reorganization of the same; h. Enter into agreements or contracts for such service and aid as may be necessary for the proper and effective administration of the System; i. Manage the retirement fund and other sources of the System subject to pertinent accounting rules and regulations issued by the Commission on Audit; j. Adopt from time to time a budget of expenditures for the System, including its annual budget, which shall not be more than thirty percent (30%) of the retirement fund; k. Acquire property, real or personal, which may be necessary for the attainment of the purposes of this Act;

I. Sue and be sued in court; m. Establish a performance-based system on the personnel; and, n. Perform such other acts as may be necessary for the effective implementation of this Act.

Sec. 8. Power and Functions of the Director of the System. - The Director shall

have the following powers and functions: a. Ensure the efficient and effective administration of the System; b. Ensure that the welfare of the members is prioritized through efficient and effective implementation of the programs and benefits of the System; c. Implement policies and programs formulated by the Board to attain the objectives and purposes of the System; d. Ensure that the process of the System is streamline and convenient, particularly in the availment of pension and benefits by the members or their beneficiaries; e. Recommend policies and programs for approval by the Board; f. Administer the System's resources efficiently and effectively; and recommend to the Board of Trustees the annual budget of the System; g. Determine the functions, composition, and compensation of the personnel of the System; h. Determine the functions, composition, and compensation of the personnel of the System for the approval of the Board; Appoint, transfer, or remove personnel of the System occupying those lower than managerial positions; j. Recommend to the Board the amount of contributions of employers of land-based and sea-based OFWs after thorough consultations with stakeholders, including the DMW and OWWA; k. Coordinate all policies and programs relating to OFWs as provided in this Act; and, I. Undertake necessary consultations concerning matters affecting the welfare of OFWs and their families, and recommend to the DMW policies and programs relative thereto.

Sec. 9. Personnel Complement. - Subject to the GOCC Government Act of 2011 or

Republic Act No. 10149, the Board shall determine its own staffing pattern and the number of personnel in the System. The Board shall, in accordance with existing laws and policies, select, appoint, employ, and fix the compensation of such officers and employees as may be necessary to carry out its powers and functions.

Sec. 10. Compulsory Coverage. - The System shall be compulsory upon all

documented OFWs: Provided, That if an OFW is a member of Social Security System (SSS) or any similar entity as provided under existing laws, the same may be transferred to the System, in accordance with Portability Law or Republic Act No. 7699, and any benefit or benefits accruing to the OFW from such membership shall be integrated into

the System. The OFW, however, may opt to retain existing membership with the SSS or any similar entity, but the OFW shall still be mandatorily covered by the System. Compulsory coverage of the OFW under this system shall take effect on the first 4 day of his employment in the foreign country. Non-documented OFWs may avail themselves of coverage under the System on a 6 voluntary basis. The rules on voluntary coverage shall be determined by the Board. Nothing in this Act shall be construed to prevent an OFW from availing of separate membership with other security or retirement systems, whether public or private.

Sec. 11. Separation from Employment. - When a covered OFW is separated from

employment, the obligation to pay contributions from that employment shall cease at the end of the month of separation, but the OFW shall be credited for all contributions paid and shall be entitled to all benefits provided in this Act. The OFW concerned may continue his contribution to the fund on a voluntary basis. The Board shall issue the necessary guidelines on this matter.

Sec. 12. Retirement Benefits. - All covered OFWs who had paid at least one

hundred twenty (120) monthly contributions and who have reached the age of forty-five (45) years shall be entitled to a monthly pension. The computation of the monthly pension shall be determined by the Board of Trustees in accordance with the actuarial system of the SSS. Upon the death of the retired OFW pensioner, his primary beneficiaries as of the date of his retirement shall be entitled to eighty percent (80%) of the monthly pension. Provided, That if the OFW has no primary beneficiaries and dies within sixty (60) months from the start of his monthly pension, the secondary beneficiaries shall be entitled to a lump sum benefit equivalent to: a. Thirty six (36) times the monthly pension - if the member has paid at least 36 monthly contributions prior to the semester of death; or, b. Monthly pension times the number of monthly contributions paid or twelve (12) times the monthly pension, whichever is higher - if the member has not paid the required 36 monthly contributions prior to the semester of death.

Sec. 13. Dependent's Pension. - The dependent's pension shall be equivalent to

ten percent (10%) of the member's monthly pension. This is paid for each dependent child conceived/legally adopted on or before the date of retirement of the member, but shall not exceed five (5) in number beginning with the youngest and without substitution. Provided, That his dependents born, before his retirement, from a marriage subsisting when the member was forty (40) years old shall be entitled to the dependent's pension.

Sec. 14. Early Retirement and Voluntary Separation Benefits. - Any OFW who

voluntarily elects in writing to retire prior to the age of forty-five (45) but has served for 38 at least five (5) years in overseas employment or separated from the overseas 39 employment shall be paid retirement or separation benefits equivalent to one and one-

fourth (1¼) month basic salary for every year of their respective overseas employment or the nearest equivalent fraction thereof favorable to them on the basis of the highest salary which they respectively received in the course of their employment in the foreign country.

Sec. 15. Retirement Fund. - There shall be created an Overseas Filipino Workers

Retirement Fund, hereinafter referred to as the "Fund", where all OFWs who are duly registered with the DMW shall remit five (5%) of their gross monthly income for at least ten (10) years. The Fund shall be used for the purpose of providing retirement benefits and similar gratuities to OFW or their beneficiaries.

Sec. 16. Sources of Fund. - In addition to the monthly contribution of the OFWs to

the Fund, the Fund shall be financed from the following sources: a. Ten percent (10%) from the fees charged by medical testing centers which provide medical test to overseas job-applicants; b. Ten percent (10%) from fees charged by Philippine international airports to outgoing OFWs; c. Ten percent (10%) from fees charged by OFW training centers, recruitment agencies, and manning agencies; d. Twenty percent (20%) from fees charged by the DMW from the Overseas Employment Certificate; e. Savings from Assistance to Nationals administered by the Department of Foreign Affairs, and Aksyon Fund by the DMW, if there are any; f. Grants, bequests from donors, local or foreign, to the System; and 9. Fifty Million Pesos (Php50,000,000.00) annually for five (5) years to be appropriated by the National Government and shall be taken from the Contingency Fund of the Office of the President to complement the Overseas Filipino Workers Fund's Reserve

Sec. 17. Appropriation. - To effectively implement the provisions of this Act, the

amount of One Hundred Million Pesos (Php100.000.000.00) is hereby appropriated for the initial capitalization of the System to be charged to the current appropriations of the Office of the President. Thereafter, the amount necessary for the continuous operation of the System shall be included in the annual General Appropriations Act.

Sec. 18. Implementing Rules and Regulations. - Within sixty (60) days from the

effectivity of this Act, The DMW shall, in coordination with the OWWA, the Department of Finance, the Bangko Sentral ng Pilipinas, and the SSS, promulgate the rules and regulations to effectively implement the provisions of this Act.

Sec. 19. Separability Clause. - If any provision or part of this Act is declared invalid

or unconstitutional, the remaining parts not affected shall remain in full force and effect.

Sec. 20. Repealing Clause. - All laws, presidential decrees, executive orders, letters

39 of instructions, administrative orders, proclamations or administrative regulations that are

inconsistent with the provisions of this Act are hereby repealed, amended, or modified accordingly.

Sec. 21. Effectivity. - This Act shall take effect fifteen (15) days following its

complete publication in the Official Gazette or in a newspaper of general circulation. Approved,