Summary
The social security system in the Philippines provides retirement, death, funeral, maternity leave, permanent disability, sickness and unemployment benefits. The retirement benefit element is a mandatory provident fund. In addition, the Philippine Health Insurance Corporation provides health benefits.
Details
Contributions
Maximum employer contributions to social security and the healthcare system are, combined, around $984 per year for foreign nationals. Maximum employee contributions to the social security and healthcare funds are approximately $636 per year. Filipino employees and their employers are also required to pay a small monthly contribution to the Home Development Mutual Fund.
Treaties
The Philippines has 16 social security agreements, mainly with European countries, and including the UK, France, Germany and the Netherlands. It has an agreement with Canada, but not with the US.
In the case of European expatriates moving to the Philippines, a certificate of coverage would usually be applied for to maintain contributions and coverage in the home country. As Philippine contributions are so low, structuring assignments so that mandatory home coverage does not continue could generate significant cost savings. Such an approach would have an impact on individual benefit entitlements at home, but home country voluntary contributions could be explored as an alternative to maintain a level of home country entitlements.
US expatriates assigned to work in the Philippines will be subject to a double social security charge, although the economic impact of this is not great because of the low level of Philippine social security contributions.
Exemptions
Given the low level of contributions to the social security system, the use of exemptions to reduce the amount payable is rare.
Administration
Contributions to the Social Security scheme and PHIC are paid over separately by the employing or hosting Philippine entity. They are either paid directly to the Bureau of Internal Revenue, or to one of the many approved collecting agents in the Philippines, alongside tax withholding.
Benefits
To receive retirement benefits, at least 10 years of contributions to the Philippine system (or to the social security system of a treaty country) are required. Benefits can be drawn at the age of 60 and is payable as a lump sum benefit to individuals who have not met the 120 month contribution requirement.
Social security insights are intended to provide quick and straightforward insights into social security regimes. Always seek professional advice based on actual circumstances before acting.
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