By Karen Galarpe on November 13, 2009 5:44 PM
Inquirer Blogs
WHILE ON a recent trip to Japan, I heard a story about an OFW driver who nearly wasted away his earnings. He worked in Japan for close to 30 years, and at one point was earning an equivalent of P400,000 a month with overtime pay. He had a wife and child back home in the Philippines and was able to send his child to school. However, he was always out drinking at bars in expensive Tokyo while having several relationships with other women. "Puro good time," they say.
Well the guy wasn’t able to hold on to his job due to his drinking problem. His employer asked him to resign, and he was given an equivalent of P2 million as separation pay.
His Filipino friends could only shake their heads in disbelief at how he wasted away the opportunity to have a well-paying job, and how he was not able to save any money to make his life better. Last they heard, he was back home, bought himself a tricycle which he drives for a living, and is staying with his parents since he could not afford to buy a house of his own.
Filipinos who leave the country to work overseas do so to earn more money in order to help support their families back home. However, not every OFW gets to lay out a stable financial future.
The problem, says Raul D. Dimayuga, senior vice-president and head of the global remittance division of the Bank of the Philippine Islands, is €œinitially a lack of awareness of what to do. For many of [OFWs], it is the first time that they are able to receive a larger amount of money than what they used to and if they are not properly advised, they would tend to use the funds for consumption.
This is why BPI has embarked on providing a financial literacy program to its clients, especially OFWs and their beneficiaries. It has conducted the BPInoy Learning Series caravans in Iloilo, Cavite, Dumaguete, Davao, and most recently, in Cebu, and Cagayan de Oro, among others. The series seeks to show that financial control is possible even away from home. By using interactive modules, participants are taught how to save, invest and make use of available technology to do banking transactions. BPI services and products designed specifically for the global Filipino are also introduced, such as the BPInoy Remittance, BPInoy Savings Account, BPInoy Save-up (build up savings account with free life insurance), BPInoy loan products, and Credit Card.
Dimayuga says these are the basics that an OFW must have to be on the road to financial stability:
1. An account for himself separate from that of his beneficiary. €œThis way he is able to segregate his savings from his transactional account, i.e., funds needed by his beneficiary for day-to-day expenses.
2. A plan for himself in terms of how much to save and set aside as budget for the family expenses which he agrees on with his beneficiary. €œThis way his plans are aligned with that of his family and the road to financial stability becomes a family affair. Ideally, he should be saving between 10 to 20 percent of his monthly income.
3. An investment plan.
€œOverseas Filipinos contribute substantially to our country'€™s growing economy. As a bank, we want to provide financial education to empower our global Filipinos to fulfill their dreams that fueled their decision to go abroad, adds Teresita B. Tan, head of overseas banking and channel services group of BPI.
Showing posts with label Financial Planning. Show all posts
Showing posts with label Financial Planning. Show all posts
Sunday, June 6, 2010
Wednesday, December 9, 2009
Plan your estate before it's too late
Nothing is certain except death and taxes. In the Philippines, the inevitable burden of taxes cannot be more emphasized by the fact that estate tax even ensues at the time of death.
Estate tax is an excise tax on the right of transmitting the property of a deceased person to his legal heirs and beneficiaries. Under the Philippine Revenue Regulations (RR) No. 02-03, otherwise known as the Consolidated Revenue Regulations on Estate Tax and Donor’s Tax, “succession takes place upon the death of the decedent and the right of the State to tax the privilege to transmit the estate vests instantly upon death”. Thus, while House Bill No. 5602, which seeks to abolish the imposition of estate tax by repealing Title III, Chapter I, Sections 84 to 97 of the Philippine Tax Code, is not passed into law, the estate tax is indeed an inevitable burden to our heirs.
We’ve heard so many stories about grieving asset-rich (but not necessarily cash-rich) families getting the shock of their lives when they learn about the amount of estate tax that has to be paid to transfer their deceased relative’s property. In some cases, families with limited funds end up borrowing cash or selling properties and businesses to be able to settle the estate tax, including penalties and interest that arise when the tax is not paid within the prescribed period.
As we remember our loved ones who have passed away, it may be wise to start thinking of our own estate. Is it necessary to have an estate tax plan? Is it more tax-efficient to establish trusts and holding companies? To help you answer this question, it is best to know first your potential estate tax liability.
The Philippine Tax Code imposes estate tax at progressive rates ranging from five to 20 percent based on the decedent’s net estate, which is gross estate less allowable deductions. A decedent’s gross estate is comprised of the value of all his property, real or personal, tangible or intangible, wherever situated, including, among others, transfers in contemplation of death, revocable transfers, and transfers for insufficient consideration.
The following items are deductible from the gross estate:
1. Expenses, losses, indebtedness, and taxes
Included under this item are the following expenses:
a. Funeral expenses
This category refers to actual funeral expenses up to the time of interment, or an amount equal to five percent of the gross estate, whichever is lower, but not exceeding PhP 200,000. Expenses incurred after the interment and any portion of the funeral expenses shouldered by relatives and friends of the deceased are not deductible.
b. Judicial expenses of the testamentary or intestate proceedings
Expenses deductible under this category are those incurred during the settlement of the estate but not beyond the last day prescribed by law, or the extension thereof, for the filing of the estate tax return. The filing of the estate tax return and payment of the corresponding tax must be made within 6 months from the decedent’s death. In meritorious cases, an extension of time not exceeding 30 days may be granted for the filing of the estate tax return.
c. Claims against the estate
The term “claims” means debts or demands of pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments.
d. Claims against insolvent persons where the value of the decedent’s interest therein is included in the value of the gross estate
e. Unpaid mortgages, taxes and casualty losses
This category includes (i) unpaid mortgages upon property where the value of the decedent’s interest therein is included in the value of the gross estate, (ii) taxes that have accrued as of the death of the decedent which were unpaid as of the time of death, and (iii) losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement, when such losses are not compensated for by insurance or otherwise.
2. Property previously taxed
This deductible item is referred to as “vanishing deduction”, which is a deduction allowed for properties which were previously subject to donor’s or estate taxes. It is called such because the deduction allowed diminishes for a period of five years.
3. Transfers for public use
This refers to the amount of all bequests, legacies, devises or transfers to or for the use of the government, or any political subdivision thereof, exclusively for public purposes.
4. The family home
The current fair market value of the decedent’s family home is deductible only to the extent of P1,000,000. In order to be deductible, the family home must be the actual residential home of the decedent and his family at the time of his death, as certified by the barangay captain of the locality where the family home is situated and the total value of the family home must be included as part of the gross estate of the decedent.
5. Standard deduction of P1,000,000 without need of substantiation
6. Medical expenses
The amount of deductible medical expenses should not exceed P500,000. This item includes cost of medicines, hospital bills, doctors’ fee, etc. which were incurred within one year prior to the decedent’s death.
7. Amount of retirement benefits from the decedent’s employer as a consequence of the death of the decedent-employee, provided that the amount of the separation benefit is included as part of the gross estate of the decedent.
8. Share in the conjugal property
The amount deductible under this category is the net share of the surviving spouse in the conjugal partnership property after deducting the obligations chargeable to such property.
Except for the standard deduction of P1,000,000, the deductions from the gross estate must be duly substantiated in accordance with the provisions of the Tax Code and RR No. 02-03.
The resulting net estate shall be the basis for the computation of the estate tax in accordance with the following schedule:
Knowing your potential estate tax liability, you may start developing an estate plan that will legally minimize estate tax and protect your wealth for the benefit of your legal heirs and beneficiaries. Death and taxes are not only certain, but the possible convergence of their respective consequences may haunt our loved ones.
(Maria Myla S. Maralit is a Director for Tax & Corporate Services of Manabat Sanagustin & Co., CPAs, a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email mmaralit@kpmg.com or mmaralit@kpmg.com.ph)
KPMG CORNER By Maria Myla S. Maralit (The Philippine Star) Updated December 08, 2009 12:00 AM
Estate tax is an excise tax on the right of transmitting the property of a deceased person to his legal heirs and beneficiaries. Under the Philippine Revenue Regulations (RR) No. 02-03, otherwise known as the Consolidated Revenue Regulations on Estate Tax and Donor’s Tax, “succession takes place upon the death of the decedent and the right of the State to tax the privilege to transmit the estate vests instantly upon death”. Thus, while House Bill No. 5602, which seeks to abolish the imposition of estate tax by repealing Title III, Chapter I, Sections 84 to 97 of the Philippine Tax Code, is not passed into law, the estate tax is indeed an inevitable burden to our heirs.
We’ve heard so many stories about grieving asset-rich (but not necessarily cash-rich) families getting the shock of their lives when they learn about the amount of estate tax that has to be paid to transfer their deceased relative’s property. In some cases, families with limited funds end up borrowing cash or selling properties and businesses to be able to settle the estate tax, including penalties and interest that arise when the tax is not paid within the prescribed period.
As we remember our loved ones who have passed away, it may be wise to start thinking of our own estate. Is it necessary to have an estate tax plan? Is it more tax-efficient to establish trusts and holding companies? To help you answer this question, it is best to know first your potential estate tax liability.
The Philippine Tax Code imposes estate tax at progressive rates ranging from five to 20 percent based on the decedent’s net estate, which is gross estate less allowable deductions. A decedent’s gross estate is comprised of the value of all his property, real or personal, tangible or intangible, wherever situated, including, among others, transfers in contemplation of death, revocable transfers, and transfers for insufficient consideration.
The following items are deductible from the gross estate:
1. Expenses, losses, indebtedness, and taxes
Included under this item are the following expenses:
a. Funeral expenses
This category refers to actual funeral expenses up to the time of interment, or an amount equal to five percent of the gross estate, whichever is lower, but not exceeding PhP 200,000. Expenses incurred after the interment and any portion of the funeral expenses shouldered by relatives and friends of the deceased are not deductible.
b. Judicial expenses of the testamentary or intestate proceedings
Expenses deductible under this category are those incurred during the settlement of the estate but not beyond the last day prescribed by law, or the extension thereof, for the filing of the estate tax return. The filing of the estate tax return and payment of the corresponding tax must be made within 6 months from the decedent’s death. In meritorious cases, an extension of time not exceeding 30 days may be granted for the filing of the estate tax return.
c. Claims against the estate
The term “claims” means debts or demands of pecuniary nature which could have been enforced against the deceased in his lifetime and could have been reduced to simple money judgments.
d. Claims against insolvent persons where the value of the decedent’s interest therein is included in the value of the gross estate
e. Unpaid mortgages, taxes and casualty losses
This category includes (i) unpaid mortgages upon property where the value of the decedent’s interest therein is included in the value of the gross estate, (ii) taxes that have accrued as of the death of the decedent which were unpaid as of the time of death, and (iii) losses incurred during the settlement of the estate arising from fires, storms, shipwreck, or other casualties, or from robbery, theft or embezzlement, when such losses are not compensated for by insurance or otherwise.
2. Property previously taxed
This deductible item is referred to as “vanishing deduction”, which is a deduction allowed for properties which were previously subject to donor’s or estate taxes. It is called such because the deduction allowed diminishes for a period of five years.
3. Transfers for public use
This refers to the amount of all bequests, legacies, devises or transfers to or for the use of the government, or any political subdivision thereof, exclusively for public purposes.
4. The family home
The current fair market value of the decedent’s family home is deductible only to the extent of P1,000,000. In order to be deductible, the family home must be the actual residential home of the decedent and his family at the time of his death, as certified by the barangay captain of the locality where the family home is situated and the total value of the family home must be included as part of the gross estate of the decedent.
5. Standard deduction of P1,000,000 without need of substantiation
6. Medical expenses
The amount of deductible medical expenses should not exceed P500,000. This item includes cost of medicines, hospital bills, doctors’ fee, etc. which were incurred within one year prior to the decedent’s death.
7. Amount of retirement benefits from the decedent’s employer as a consequence of the death of the decedent-employee, provided that the amount of the separation benefit is included as part of the gross estate of the decedent.
8. Share in the conjugal property
The amount deductible under this category is the net share of the surviving spouse in the conjugal partnership property after deducting the obligations chargeable to such property.
Except for the standard deduction of P1,000,000, the deductions from the gross estate must be duly substantiated in accordance with the provisions of the Tax Code and RR No. 02-03.
The resulting net estate shall be the basis for the computation of the estate tax in accordance with the following schedule:
Knowing your potential estate tax liability, you may start developing an estate plan that will legally minimize estate tax and protect your wealth for the benefit of your legal heirs and beneficiaries. Death and taxes are not only certain, but the possible convergence of their respective consequences may haunt our loved ones.
(Maria Myla S. Maralit is a Director for Tax & Corporate Services of Manabat Sanagustin & Co., CPAs, a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email mmaralit@kpmg.com or mmaralit@kpmg.com.ph)
KPMG CORNER By Maria Myla S. Maralit (The Philippine Star) Updated December 08, 2009 12:00 AM
Sunday, December 6, 2009
Harnessing OFW remittances
A NEWS report quoting a study conducted by a civic group, Atikha Overseas Workers and Communities, as saying that about 70 percent of overseas Filipino workers (OFWs) are unable to save or invest for themselves due to financial-management illiteracy reflects lost opportunity.
With 10 percent of the 92 million Filipinos, or 9 million, working abroad and sending money back home, there is so much money that could have been invested in productive enterprises.
Last year OFWs sent home $16.4 million. If the projection of the Bangko Sentral ng Pilipinas (BSP) proves right that the OFW remittances will grow 4 percent this year, these remittances will top $17 billion this year. Remittances have been valued at 10 percent of the gross domestic product (GDP) and have been credited with fueling household consumption, which accounts for 70 percent of the country’s economy.
For next year, the BSP predicts that remittances will grow by another 6 percent because of the global economic recovery.
Think how much impact it would have if the country can harness the potentials of this big money coming in from other countries every year, beyond fueling household consumption like the purchase of appliances and home improvements. To think that the exports of Filipino labor have been going on since the Marcos years in the 1970s, which at the time served as a safety valve for disgruntled Filipinos who couldn’t find jobs in the country.
The Filipino diaspora has continued since then. And, yes, OFWs were able to provide for the expenses of their families back home, for the purchase of household appliances and for the education of their children. But not much beyond that. We’re thinking in terms of savings and investments, not expenses for fiestas or other profligate ways that dry up savings. We’re thinking of making OFWs entrepreneurs.
Atikha executive director Mai Añonuevo says the OFWs’ failure to save and invest negates the opportunity to harness their remittances for developing communities, especially the rural areas, through the establishment of social enterprises funded by OFW money. This means creating businesses, owned by the OFWs and which will create jobs.
The biggest hurdle seems to be the lack of financial literacy of the OFWs themselves. We have to realize that most of these OFWs did not have training in business and finance before they left the country to work abroad. Neither did they have the opportunity to get training abroad because they have been busy working and earning.
The European Commission (EC) and the United Nations (UN) have taken the initiative to help by collaborating with local nongovernment organizations. They provided P52.3 million for various projects, including one that seeks to maximize the gains and minimize the social cost of overseas migration through the development of initiatives that will enhance the OFWs’ financial literacy and their families.
Mayan Villaba, who handles the “Enhancing the Capacity of Migrants as Partners of Economic Development” program, also funded by the EC and the UN, explains that remittances have the potential to develop rural communities and provide jobs to townsfolk, if OFW savings are invested in social enterprise.
This is really a matter of proper budgeting and goal-setting, says Añonuevo, and the OFWs will be able to save and invest for their future. We agree and we should work for that, because OFWs, after years of working abroad, will have to think about the time when they come back home for good. They would need something to do with their time and savings. Wouldn’t it be nice if they can contribute something to their communities with their enterprises that create jobs? - Editorial, Business Mirror, Wednesday, 18 November 2009 20:55
With 10 percent of the 92 million Filipinos, or 9 million, working abroad and sending money back home, there is so much money that could have been invested in productive enterprises.
Last year OFWs sent home $16.4 million. If the projection of the Bangko Sentral ng Pilipinas (BSP) proves right that the OFW remittances will grow 4 percent this year, these remittances will top $17 billion this year. Remittances have been valued at 10 percent of the gross domestic product (GDP) and have been credited with fueling household consumption, which accounts for 70 percent of the country’s economy.
For next year, the BSP predicts that remittances will grow by another 6 percent because of the global economic recovery.
Think how much impact it would have if the country can harness the potentials of this big money coming in from other countries every year, beyond fueling household consumption like the purchase of appliances and home improvements. To think that the exports of Filipino labor have been going on since the Marcos years in the 1970s, which at the time served as a safety valve for disgruntled Filipinos who couldn’t find jobs in the country.
The Filipino diaspora has continued since then. And, yes, OFWs were able to provide for the expenses of their families back home, for the purchase of household appliances and for the education of their children. But not much beyond that. We’re thinking in terms of savings and investments, not expenses for fiestas or other profligate ways that dry up savings. We’re thinking of making OFWs entrepreneurs.
Atikha executive director Mai Añonuevo says the OFWs’ failure to save and invest negates the opportunity to harness their remittances for developing communities, especially the rural areas, through the establishment of social enterprises funded by OFW money. This means creating businesses, owned by the OFWs and which will create jobs.
The biggest hurdle seems to be the lack of financial literacy of the OFWs themselves. We have to realize that most of these OFWs did not have training in business and finance before they left the country to work abroad. Neither did they have the opportunity to get training abroad because they have been busy working and earning.
The European Commission (EC) and the United Nations (UN) have taken the initiative to help by collaborating with local nongovernment organizations. They provided P52.3 million for various projects, including one that seeks to maximize the gains and minimize the social cost of overseas migration through the development of initiatives that will enhance the OFWs’ financial literacy and their families.
Mayan Villaba, who handles the “Enhancing the Capacity of Migrants as Partners of Economic Development” program, also funded by the EC and the UN, explains that remittances have the potential to develop rural communities and provide jobs to townsfolk, if OFW savings are invested in social enterprise.
This is really a matter of proper budgeting and goal-setting, says Añonuevo, and the OFWs will be able to save and invest for their future. We agree and we should work for that, because OFWs, after years of working abroad, will have to think about the time when they come back home for good. They would need something to do with their time and savings. Wouldn’t it be nice if they can contribute something to their communities with their enterprises that create jobs? - Editorial, Business Mirror, Wednesday, 18 November 2009 20:55
Wednesday, June 3, 2009
Gearing for OFWs' financial wellness
By Maricar Cinco
Southern Luzon Bureau
Posted date: November 23, 2008
A FAMILY that "saves" together would stay together, specially during hard times.
This is what the proponents of the Pamilyang OFW Savers' Club, a financial fitness program, believes when they decided to put up the program to teach sons and daughters of OFWs (SDOs) and immigrants to make wise financial decisions with the remittances sent by their parents.
Moreover, the program promotes the Christian value of reuniting families separated by the need of the parents to work away from home for a better living.
The project is a product of the partnership between the Pioneer group of companies, a life and nonlife insurance firm and the Lipa Archdiocesan Commission for Migrants and Mission (Lacmmi).
Lacmmi is the migrant commission of the Catholic Bishops' Conference of the Philippines-Episcopal Commission for the Pastoral Care of Migrants and Itinerant People (CBCP-ECMI) in Batangas.
It was a "chance encounter" in 2006 between Fr. Jojo Gonda and June Inabayan of Lacmmi and Pioneer, respectively, that gave birth to the project. This was followed by a series of meetings that resulted in CBCP-ECMI endorsing the financial program to its migrant commissions in the regions.
Batangas, having the highest concentration of migrant workers according to Rolly Robles, Pioneer senior vice president, was chosen to be the program's pilot area.
The Pamilyang OFW Savers' Club was finally launched in the province in October at the Lipa Youth Sports and Cultural Center.
Amid the crises plaguing the country and the global market, Fr. Edwin Corros of ECMI believed in the relevance of instilling the value of saving.
In an e-mail sent to Inquirer, he said "the global financial meltdown stresses the significance of creating a targeted program that can equip the sons and daughters of OFWs with saving skills."
The program has two modules, which begin at asking SDOs to envision the kind of family they want to have.
The children are then asked to think of various ways on how to make these dreams happen, with focus on the financial aspect.
Lastly, they are asked to think of ways to better manage their financial resources, particularly the money their parents send them.
"Children will realize the importance of saving some money, why they have to save and what its impact is to the entire family," said Robles.
At the end of the module, children are given piggy banks where they can put in money every school day.
"The amount of money depends on how much they need to be able to attain the financial goal they identified during the first session," Robles explained.
This part, he added, is the application of the earlier sessions.
SDO coordinators, who are teachers or guidance counselors of schools, keep the piggy banks and record the students who put in money regularly.
Once the savings reach a certain amount, SDOs may convert the money into "bite-sized savings product" that Pioneer calls the Sparxx (read as Sparx to the x) with an interest rate of 3-3.5 percent.
"We teach them the habit of saving (and) how possible it is to save regardless of their parents' income," he said.
Earlier homecoming
Not only that saving for the rainy season is a value inculcated in the SDOs, but the program is also geared toward attaining a "shared dream in life" to reintegrate the Filipino family.
"The sons and daughters of OFWs (should become) partners of their families for the early return of the parents," Robles said.
He explained how SDOs are taught to give high value to the money their parents work for and send to them. And the more unwisely the children spend their money could delay their parents' coming back to the Philippines as they would need to work harder abroad.
According to him, "the capability of the SDOs to effect the early return of their parents is immense because they are the main beneficiaries of OFW remittances."
Upon returning to the Philippines, OFWs may look forward to a sustainable livelihood with their children by using the earnings as capital to start an investment.
The program also serves as a bridge connecting the children to their parents overseas.
After the session with the SDOs, a team of Pioneer employees flies abroad to hold a similar session with the parents.
"The team takes a video of the children and their output, making the parents excited for the next session," Robles said.
Asked what the group plans of the project, he said "as soon as we have a success story to tell we can replicate this in other dioceses that are ready and willing to implement this in their areas."
Pioneer, Robles said, has also been conducting a similar financial program for seafarers, professionals, community leaders and the company's clients and employees.
Southern Luzon Bureau
Posted date: November 23, 2008
A FAMILY that "saves" together would stay together, specially during hard times.
This is what the proponents of the Pamilyang OFW Savers' Club, a financial fitness program, believes when they decided to put up the program to teach sons and daughters of OFWs (SDOs) and immigrants to make wise financial decisions with the remittances sent by their parents.
Moreover, the program promotes the Christian value of reuniting families separated by the need of the parents to work away from home for a better living.
The project is a product of the partnership between the Pioneer group of companies, a life and nonlife insurance firm and the Lipa Archdiocesan Commission for Migrants and Mission (Lacmmi).
Lacmmi is the migrant commission of the Catholic Bishops' Conference of the Philippines-Episcopal Commission for the Pastoral Care of Migrants and Itinerant People (CBCP-ECMI) in Batangas.
It was a "chance encounter" in 2006 between Fr. Jojo Gonda and June Inabayan of Lacmmi and Pioneer, respectively, that gave birth to the project. This was followed by a series of meetings that resulted in CBCP-ECMI endorsing the financial program to its migrant commissions in the regions.
Batangas, having the highest concentration of migrant workers according to Rolly Robles, Pioneer senior vice president, was chosen to be the program's pilot area.
The Pamilyang OFW Savers' Club was finally launched in the province in October at the Lipa Youth Sports and Cultural Center.
Amid the crises plaguing the country and the global market, Fr. Edwin Corros of ECMI believed in the relevance of instilling the value of saving.
In an e-mail sent to Inquirer, he said "the global financial meltdown stresses the significance of creating a targeted program that can equip the sons and daughters of OFWs with saving skills."
The program has two modules, which begin at asking SDOs to envision the kind of family they want to have.
The children are then asked to think of various ways on how to make these dreams happen, with focus on the financial aspect.
Lastly, they are asked to think of ways to better manage their financial resources, particularly the money their parents send them.
"Children will realize the importance of saving some money, why they have to save and what its impact is to the entire family," said Robles.
At the end of the module, children are given piggy banks where they can put in money every school day.
"The amount of money depends on how much they need to be able to attain the financial goal they identified during the first session," Robles explained.
This part, he added, is the application of the earlier sessions.
SDO coordinators, who are teachers or guidance counselors of schools, keep the piggy banks and record the students who put in money regularly.
Once the savings reach a certain amount, SDOs may convert the money into "bite-sized savings product" that Pioneer calls the Sparxx (read as Sparx to the x) with an interest rate of 3-3.5 percent.
"We teach them the habit of saving (and) how possible it is to save regardless of their parents' income," he said.
Earlier homecoming
Not only that saving for the rainy season is a value inculcated in the SDOs, but the program is also geared toward attaining a "shared dream in life" to reintegrate the Filipino family.
"The sons and daughters of OFWs (should become) partners of their families for the early return of the parents," Robles said.
He explained how SDOs are taught to give high value to the money their parents work for and send to them. And the more unwisely the children spend their money could delay their parents' coming back to the Philippines as they would need to work harder abroad.
According to him, "the capability of the SDOs to effect the early return of their parents is immense because they are the main beneficiaries of OFW remittances."
Upon returning to the Philippines, OFWs may look forward to a sustainable livelihood with their children by using the earnings as capital to start an investment.
The program also serves as a bridge connecting the children to their parents overseas.
After the session with the SDOs, a team of Pioneer employees flies abroad to hold a similar session with the parents.
"The team takes a video of the children and their output, making the parents excited for the next session," Robles said.
Asked what the group plans of the project, he said "as soon as we have a success story to tell we can replicate this in other dioceses that are ready and willing to implement this in their areas."
Pioneer, Robles said, has also been conducting a similar financial program for seafarers, professionals, community leaders and the company's clients and employees.
Sunday, May 24, 2009
Gulf News readers in favour of saving schemes
http://archive.gulfnews.com/articles/09/05/23/10315961.html
05/22/2009 | By Rabab Khan, Community Journalist
Dubai: When the global financial crisis struck, the primary concern for most people was to keep their savings in a safe place.
Bonds and fixed deposits are just some of the ways to achieve this and Gulf News readers shared their experiences with saving schemes.
Lim Norma, a Filipino expatriate, said she is grateful for the saving schemes available in the country.
She said: "Recently, I invested in saving certificates and I think it is a good offer. We keep our money safe and at the end of the day have a chance to win a large sum of money. Additionally, it is not about winning, it is about psychological satisfaction."
Norma believes that companies should consider using the schemes at a corporate level.
She said: "In the Philippines, some companies encourage employees to invest in bonds, which are not necessarily related to the company. There is a minimum amount and the dividends differ based on your contribution. Also, employees can withdraw their invested amount at any point."
Tripti Pathak, an Indian expatriate, feels that her money is secure when using fixed deposits.
She said: "It is a great way to be certain that part of our income is safe and will amount to a certain profit during the year, in the form of interest."
Pathak urges companies to start utilising saving schemes for the benefit of their employees.
She said: "If companies used the schemes, it would give some sort of security to their employees and help safeguard their money for the uncertainties in life. Additionally, it would be a great form of motivation for them."
Looking at the flip side of the coin is Nirmal Devasurendra, a Sri Lankan expatriate, who is sceptical about saving schemes.
He said: "I personally think it is not a sound investment, especially considering the global financial crisis. I would not want to allocate all my funds in one place. However, I do know somebody who received prize money after investing in one of the saving schemes, recently. It is a one-time shot and could be a good opportunity for some."
Mona Syed-Mirza, a British expatriate, agrees.
She said: "Before investing in one of the options, we need to analyse our personal situation and make an informed decision. In a stable environment, a fixed deposit might be a good idea, as it is a good way to earn a little money through interest. But, if you are in a time of need you can get unnecessarily tied up."
05/22/2009 | By Rabab Khan, Community Journalist
Dubai: When the global financial crisis struck, the primary concern for most people was to keep their savings in a safe place.
Bonds and fixed deposits are just some of the ways to achieve this and Gulf News readers shared their experiences with saving schemes.
Lim Norma, a Filipino expatriate, said she is grateful for the saving schemes available in the country.
She said: "Recently, I invested in saving certificates and I think it is a good offer. We keep our money safe and at the end of the day have a chance to win a large sum of money. Additionally, it is not about winning, it is about psychological satisfaction."
Norma believes that companies should consider using the schemes at a corporate level.
She said: "In the Philippines, some companies encourage employees to invest in bonds, which are not necessarily related to the company. There is a minimum amount and the dividends differ based on your contribution. Also, employees can withdraw their invested amount at any point."
Tripti Pathak, an Indian expatriate, feels that her money is secure when using fixed deposits.
She said: "It is a great way to be certain that part of our income is safe and will amount to a certain profit during the year, in the form of interest."
Pathak urges companies to start utilising saving schemes for the benefit of their employees.
She said: "If companies used the schemes, it would give some sort of security to their employees and help safeguard their money for the uncertainties in life. Additionally, it would be a great form of motivation for them."
Looking at the flip side of the coin is Nirmal Devasurendra, a Sri Lankan expatriate, who is sceptical about saving schemes.
He said: "I personally think it is not a sound investment, especially considering the global financial crisis. I would not want to allocate all my funds in one place. However, I do know somebody who received prize money after investing in one of the saving schemes, recently. It is a one-time shot and could be a good opportunity for some."
Mona Syed-Mirza, a British expatriate, agrees.
She said: "Before investing in one of the options, we need to analyse our personal situation and make an informed decision. In a stable environment, a fixed deposit might be a good idea, as it is a good way to earn a little money through interest. But, if you are in a time of need you can get unnecessarily tied up."
Saturday, April 4, 2009
Overseas Filipino workers get financial boost
DUBAI (via PLDT) -- President Gloria Macapagal-Arroyo ended her brief visit here Monday after launching various financial programs to help overseas Filipino workers (OFWs) save money despite the weak US dollar.
Among the new OFW packages she launched Sunday night before some 300 Filipino workers at the ballroom of the Mina Al-Salam Hotel here were: a hedge fund that will guarantee an agreed-upon dollar-peso exchange rate, a fast-transfer digital cash card, a high-yielding deposit facility, OFW bonds, stock investing seminars, offers for “Tindahang Pinoy” franchises, and others.
The hedging program aims to protect the OFWs’ savings from the weak dollar that has drastically cut the peso equivalent of their earnings. The cash card, on the other hand, would allow them to quickly send money back home via short-messaging system or text.
The President explained to the Filipino community that the positive side of the dollar’s drop was that it had reduced the national debt and import bill, kept the inflation down, and more importantly, offset the impact of high world oil prices.
“But having said that, we know that we have to cushion the impact of the strengthening of the peso on our overseas Filipinos’ earnings,” she said.
Under the Development Bank of the Philippines’ hedging program, a worker can avail himself of insurance that would allow him to insure one’s dollar remittance at a certain protection rate.
The worker can later sell the dollars to the DBP at the pre-agreed protection rate.
Apart from this unique insurance, the worker has another option to avail himself of a forward exchange contract which would allow him to sell his dollars to the DBP at a contract rate on a specified future date.
The dollars are “locked in” at the contract rate (also forward rate) regardless of the peso depreciation or appreciation.
“Those who will avail of the insurance will pay an insurance fee, around one percent of the amount of remittance to cover the OFW at the pre-agreed exchange rate,” said the President, who arrived here Saturday night from Switzerland.
The program is voluntary, she stressed.
Filipino workers in the United Arab Emirates alone remitted $.5 billion last year, according to the President.
Overall, OFWs sent back an estimated $15 billion last year.
The President also announced that the government would launch “OFW bonds” in March to likewise cushion the impact of the shrinking peso equivalent of the workers’ dollar earnings.
Specifically, the government plans to launch a P5-billion deposit instrument, called long-term negotiable certificates of deposit (LTNCD), that will earn interest for the investing workers and their families.
According to finance officials, the peso-denominated LTNCD will be issued in P20,000 denominations in five- and-a-half and 10-year tenors by March. It is covered by the Philippine Deposit Insurance Corp. up to P250,000 per depositor and is exempt from withholding tax if held to maturity.
The instrument carries an indicative yield of 6.25 percent for a five-and-a-half-year term, and 6.88 percent if held for 10 years. The final interest rates, however, will depend on the prevailing market rates at the time of issuance. It will be available by March in all Land Bank of the Philippines branches, HSBC and designated selling agents.
Before addressing the Filipino community, the President held a roundtable discussion with executives of UAE companies to enlist their support for the hedging program.
She said the employers “affirmed their support.”
That same night, LBP and Smart Communications launched the low-remittance OFW cash card to allow the workers to send remittances in a cheaper, faster means via SMS.
The cash card serves as a sort of debit card linked to a mobile phone with a Smart SIM.
Using a cellphone, a worker keys in the desired amount on a menu, and transmits this by text to LBP. The worker’s relative in Manila can then withdraw the amount from LBP or its network of banks with an ATM-like beneficiary’s card. With reports from Doris Dumlao and Cynthia Balana - TJ Burgonio, Philippine Daily Inquirer, January 29, 2008
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