Want to have a tax-free equity and savings option fund investment in the Philippines? Well, now you can, by opening your SSS Provident Fund. SSS has launched their Provident Fund for eligible SSS members wanting to earn money from their investment.
While we work and save money for retirement, inflation also grows and prices keep going up. Often, we wonder if our retirement pension would be enough for our daily expenses in the near future. Because the older we get, the higher will be our cost of living.
What if we can increase our retirement money by adding investment with our social security contribution? Now, it is possible to do that by investing in SSS Provident Fund.
What is SSS Provident Fund?
SSS Provident Fund is a type of investment created to supplement the SSS benefits of members. Your funds are invested on sovereign guaranteed investments, where 65% is allocated for retirement, and 35% is for medical and general purposes. SSS PESO accounts will be charged a 1% administration fee annually.
Who Can Avail SSS Provident Fund?
The Social Security System offers this type of investment fund to the following members:
- Voluntary Members
- OFW who are interested to open this Personal Equity and Savings Option also called SSS PESO fund
Requirements to Open SSS Provident Fund:
- Open to all active members – employees, voluntary and OFW, below 55 years old
- Minimum of P1,000 placement up to maximum of P100,000 per year
- Self-employed, OFW and Voluntary members must be paying their maximum SSS contribution to qualify for the SSS PESO Fund
- Redemption is upon the member’s retirement or in cases of total disability. Early redemption is also allowed but there are penalties and service fees involved.
This is beneficial to members because it’s tax free. Maybe you’re wondering how the funds are invested and how they earn income. They are invested on Treasury bills which generates returns over time.
I think that makes them related to money market funds and fixed income instruments. The portion for retirement are invested on 5-year treasury bills while the portion for medical and general purpose are invested on 364-day treasury bills.
SSS Provident Fund Benefits:
- Savings + investment – the more you contribute to your SSS PESO fund, the more you gain
- Tax free – unlike other investments, you won’t need to pay sales tax, capital gains tax and withholding tax on this
- Lower placements – the minimum placement is lower compared to other investments
- Supplements your SSS retirement benefits – you’ll get pension + your PESO Funds (and its profit)
Disadvantages of SSS Provident Fund:
- No official online monitoring system or feature yet
- RTB can’t generate so much income
- Less risks, less returns
- Redemption is upon retirement
Hope you like my SSS Provident Fund review here. To learn more, you can read the complete rule about this SSS PESO Fund at the Social Security Law, Section 4 (a) (2).
What are your thoughts on this investment plan? Will you participate on one or would you rather rely on the usual mutual funds such as money market funds and bond funds? Share your views by commenting below.