Republic of the Philippines
HOUSE OF REPRESENTATIVES,
Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

HOUSE BILL No._1334

Introduced by Honorable Rodante D. Marcoleta

EXPLANATORY NOTE

This bill seeks to establish the Overseas Filipino Workers Retirement System
which will provide retirement benefits and welfare assistance to overseas Filipino
workers (OFWs) and their dependents.

There is no doubt that OFWs play an important role in revitalizing the economy.
OFW’s remittances contribute as much as 20 percent of the gross domestic product. The
OFWs are the so called new heroes of our time. Unfortunately, uncertainty lies before
them during their old age and retirement years. The government has yet to establish a
system that would truly assure social security and protection for the millions of OFWs
during their retirement.

At present, the Social Security System (SSS) program for OFWs offers limited
pension benefits which matures only at the age of 60. There is no law which would allow
the OFWs to receive retirement pay at an earlier age nor provide for voluntary separation
benefits. Unlike the SSS members, the employment of an OFW is purely contractual and
is usually only for a short period of time. OFWs such as domestic helpers and
construction workers usually find reemployment difficult at the age of 45. Performing
artists are not usually rehired at the age of 35. It is unthinkable for them to wait until the
age of 60 to receive their pension benefits under the SSS program,

As our modem day heroes, OFWs deserve to be given appropriate benefits and be
accorded greater security after their employment days are over. The present set-up
necessitates improvement in that direction. This bill therefore proposes to establish a
retirement system designed to provide the OFWs with funds they can use to establish a
business or other productive endeavors when they decide to finally retire or separate from
work.

In view of the foregoing, the approval of this bill is earnestly recommended,

olin . MARCOLETA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

1334

HOUSE BILL NO.

Introduced by Honorable Rodante D. Marcoleta

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 |. Short Title. ~ This Act shall be known as the “Overseas Filipino
Workers Retirement System Act of 2010.”

SEC. 2. Declaration of Policy. — \t 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 as follows:

a) ‘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;

b) “Non-documented OF W” refers to an overseas Filipino worker who does
not have valid contract of employment nor possesses the necessary documents to work
abroad;

©) “Beneficiaries” refers to the dependent spouse of an OFW, his dependent

children, whether legitimate or illegitimate, who are the primary beneficiaries. In their


absence, the dependent parents shall be the secondary beneficiaries. In the absence of the
foregoing, any other person designated by the OFW;

d) “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 years of age: Provided, That he is congenitally incapacitated and incapable
of self-support, physically or mentally; the legitimate spouse dependent for support upon
the employee; and the legitimate parents wholly dependent upon the covered employee
for regular support.

SEC. 4, Overseas Filipino Workers Social Security and Retirement
‘System. — There is hereby established an Overseas Filipino Workers Social Security and
Retirement System, hereinafter referred to as the System, which shall cover all
documented OFWs who are duly registered with the Philippine Overseas Employment
Administration.

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 by which OFWs can be encouraged
collectively to contribute part of their earnings in order to protect them against the
hazards of old-age, disability, sickness and death;

©) Ensure the viability of the funds remitted by OFWs; and

d) Establish a trust fund which will constitute the contributions of OFWs,

The System shall endeavor to strike a right balance in management and
safekeeping of the funds remitted by OFWs while extending the benefits of the System's
services to the rightfuul beneficiaries.

SEC. 6. Board of Trustees. ~ The System shall be administered by a board
of trustees which shall be composed of the Secretary of Labor and Employment, as
chairman, the Administrator of Philippine Overseas Employment Administration

(POEA), the Director of the System, two (2) representatives from the land-based overseas


workers, two (2) representatives from the seamen or seafarer’s group, and one (1)
representative each from the management and labor sectors, as members.

The director of the System and the representatives of both management and labor
sectors, upon the recommendation of the Secretary of Labor and Employment, and the
representative of both the land-based overseas workers and the seamen or the seafarers,
upon the recommendation of their respective organizations, shall be appointed by the
President.

The director shall be the chief executive officer of the System. He shall have the
qualifications, rank and compensation of bureau director. The director shall be assisted
by a deputy director who shall be appointed by the board of trustees upon the
recommendation of the chairman.

SEC. 7. Powers and Functions. ~ The Board of Trustees shall have the
following powers and functions:

a) Formulate and implement measures to attain the system's objectives and
purposes;

b) Enter into agreements or contracts for such service and aid, as may be
necessary for the proper and effective administration of the System;

©) Manage the retirement fund and other resources of the System subject to

pertinent accounting rules and regulations issued by Commission on Audit;

d) Adopt from time to time a budget of expenditures for the Systems
including its annual budget which shall not be more than thirty percent (30%) of the
retirement fund;

©) Acquire property, real or personal, which may be necessary for the
attainment of the purposes of this Act;

) Determine and fix the monthly contribution of the OFWs;

g) Sue and be sued in court;

h) Appoint such personnel as may be deemed necessary to ensure the

efficient administration of the System; and


i) Perform such other acts as may be necessary for the effective
implementation of this Act.

SEC. 8, Chairman; Powers and Functions. — The chairman shall have the
authority and responsibility of exercising the powers and functions of the System. He
shall be appointed by the President.

The Chairman shall exercise the following powers and functions:

a) Formulate and implement policies and programs to attain the objectives
and purposes ofthe System;

b) Issue rules and regulations to carry out the objectives and purposes of the
System;

c) Administer fund resources and recommend to the Board of Trustees the
annual budget of the System;

d) Determine the functions, composition, and compensation of the personnel
of the System;

e) Determine and fix the amount of contributions of employers of land-based
and sea-based OFWs;

f) Coordinate all policies and programs relating to OFWs as provided in this
Act; and

2) Undertake necessary consultations concerning matters affecting the
welfare of OFWs and their families, and recommend to the President policies and
programs relative thereto.

SEC. 9. Secretariat. — The Secretariat personnel shall be appointed by the
Chairman, upon the recommendation of the Director. The compensation of the personnel
and the operating expenses of the Secretariat shall be charged to the Retirement Fund as
hereinafter established.

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 or

any similar entity as provided under existing laws, the same shall be discontinued and


any benefit or benefits accruing to the OFW from such membership shall be integrated
into the System.

Compulsory coverage of the OFW under this system shall take effect on thé first
day of his employment in the foreign country.

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 he shall be credited with all
contributions paid and shall be entitled to all benefits provided in this Act.

SEC. 12. Retirement Benefits. — All covered OFWs who had paid at least
one hundred twenty (120) monthly contributions prior to the semester of retirement and
who has 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 Social Security System.

Upon the death of the retired OFW pensioner, his primary beneficiaries as of the
date of his retirement shall be entitled to eighty (80%) percent of the monthly pension
and his dependents to the dependent’s pension: Provided, That if he has no primary
beneficiaries and he dies within sixty months from the start of his monthly pension, his
secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the greater of
(a) twenty (20) times the monthly pension or (b) the difference of sixty (60) times the
monthly pension and the total monthly pensions by the System excluding the dependent’s
pension.

SEC. 13. Dependent’s Pension. — The dependent’s pension shall be
equivalent to ten percent (10%) of the monthly pension for each dependent child which
shall not exceed five, beginning with the youngest and shall be without substitution:
Provided, That his dependents born before his retirement of a marriage subsisting when
he 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 who

has served for at least five (5) years in overseas employment or separated from the


overseas employment shall be paid retirement or separation benefits equivalent to one
and one-fourth (1%) 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 as such with the Philippine Overseas Worker’s Administration (POEA)
shall remit five (5%) percent 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 OFWs or their beneficiaries.

SEC. 16. Source 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 (10%) percent from the fees charged by medical testing centers which
provide medical test to overseas job-applicant;

b) Ten (10%) percent from fees charged by Philippine international airports
to outgoing OF Ws;

¢) Ten (10%) percent from fees charged by OFW training centers; and

d) Fifty Million Pesos (P50,000,000.00) annually for five years to be
appropriated and 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, there is hereby appropriated the amount of One Hundred Million Pesos

(P100,000,000.00) 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. — The POEA shall, within
sixty (60) days after the effectivity of this Act, promulgate the necessary rules and
regulations for the implementation of this Act.

SEC. 19. Repealing Clause. — Any provision of laws, decrees, executive
orders, proclamations, rules and regulations, or parts thereof, which are inconsistent with
this Act are hereby repealed, amended or modified accordingly.

SEC. 20. Separability Clause. — If any portion of this Act is declared
unconstitutional or invalid, the other provisions not affected thereby shall continue in full

force and effect.

21. Bffectivity Clause. ~ This Act shall take effect fifteen (15) days
following the completion of its publication in two (2) newspapers of general circulation.

Approved,