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

Seventeenth Congress
First Regular Session

HOUSE BILL No. 8746
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. OFWs?
remittances contribute as much as 20% of the gross domestic product. The OFWs are the so
called 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
neither receive retirement pay at an earlier age nor provide 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 modern 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 OF Ws 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.



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

Seventeenth Congress
First Regular Session

ILL NO. 3746

HOU:
Introduced by Honorable 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 of 2016.”

SEC.2. Declaration of Policy. — \ 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,

SE

Definition of Terms, ~ For purposes of this Act, the following terms
shall mean:

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 possess

s 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, another 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;
legitimate spouse dependent for support upon the employee; and the
legitimate parents wholly dependent upon the covered employee for regular
support.

SECA. 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 OF Ws

who are duly registered with the Philippine Overseas Employment Administration,

SI

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;

c) Ensure the viability of the funds remitted by IF Ws; 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 OF Ws while extending the benefits of the System’s
services to the rightful 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 of seafarers 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

ations, 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 sources of the System subject to
pertinent accounting rules and regulations issued by the Commission on
Audit;

4) 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;

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

f) Determine and fix the monthly contribution of the OF Ws;

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 nec

ry for the effective

implementation of this Act.


SEC.8. Chairman; Power and Functions, — The chairman shall have

authority and responsibility of exercising the powers and functions of the System, He
shall be appointed by the President.
The Chairman shall have the following powers and functions:

) Formulate and implement policies and programs to attain the object

and purposes of the System;

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

¢) 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;

©) Determine and fix the amount of contributions of employers of land=
based and sea-based OF Ws;

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

8) Undertake necessary consultations concerning matters affecting the
welfare of OFWs and their families, and recommend to the President

policies and programs relative thereto,

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 OF Ws; Provided, That if an OF W 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 OF W under this system shall take effect on the first
day of his employment in the foreign country.

SEC. 11. Separation from Employment. ~ When a covered OF W 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 OF Ws 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 OF W pensioner, his primary beneficiaries as of the
date of his retirement shall be entitled to eighty percent (80%) 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 if his monthly pension, his


secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the greater of
(a) twenty (2) 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 (3) years in overseas employment or separated {rom 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 overs!

s 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%) 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 OF W 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 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 OF Ws;
c) Ten percent (10%) from fees charged by OFW training centers; and
d) Fifty Million Pesos (P50,000,000.00) annually for five (5) 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 shall continue in full force

and effe

SEC.21. Effectivity Clause. - This Act shall take effect fifteen (15) days

following the completion of its publication in two (2) newspapers of general circulation.

Approved,