Galang. © Gulf News
The provident fund proposed by the Filipino government as a pillar of old-age protection for the estimated five million Overseas Filipino Workers (OFWs) drew mixed reaction - from total support to outright rejection - from Filipinos here.

Philippines President Gloria Macapagal-Arroyo pledged the creation an OFW Provident Fund during her first state-of-the-nation address but left the job of making the rules to the Overseas Workers Welfare Administration (OWWA), the agency tasked with overseeing the welfare of Filipinos overseas.

Jes Galang, president of the UP Alumni Association in the UAE and an active community leader of a regional group of Pampanguenos, said: "It's one thing to have good intentions, it's quite another to implement it. Knowing that the provident fund will be managed by OFWs themselves would provide some sort of 'comfort zone'. It is important to make the intended beneficiaries feel comfortable with the scheme.

"Any scheme involving money to be managed by the government will be met with some cynicism … this is a sad reality that is inherent in our system and mindset," he said.

A typical provident fund in other countries like Singapore, Malaysia and Hong Kong – the source of billion-dollar funds invested in stock, real estate and corporate debt papers – offers retirement, educational, insurance and housing 'windows' to their members.

Currently, these services are offered to OFWs separately through the Social Security System (for retirement and insurance), Pag-Ibig (for housing), the OWWA and a huge number of private insurance and investment companies.

"I think it would be best to strengthen the programmes already in place first before creating another layer of bureaucracy," said Galang.

"Opening a provident fund requires an entirely new mindset. It's a giant leap forward wrought with many uncertainties … but it should not take OFWs a lot of convincing that it is good for them," said Ronnie Bonifacio, a Filipino community leader based in Dibba, Fujairah.

"One problem area involves the domestic helpers. Since this is also a retirement scheme, some of our domestic helpers don't work long enough. They don't earn that much either. So making it compulsory would probably complicate the scheme. But it should not deter Manila from pushing it," said Bonifacio, who is vice-chairman of the 4,000-strong Filipino community group in the eastern Emirates.

Orense. © Gulf News
"This sounds like a good plan. But this will require a lot of hard and professional work to translate the vision into real benefits," said Bonifacio.

Nazario Biado Jr, a leader of the Filipino Club of Ras Al Khaimah, said that since there's nothing concrete about the scheme yet, the organisers should welcome the ideas of the OFWs themselves.

"In general, the proposal is good. But the duplication of functions has to be addressed … because it may create confusion or inefficiency and delays in the delivery of services," said Biado.

But one clear advantage, Biado pointed out, was that OFWs would have to approach only one agency to process papers for different services – pension, housing and other services that might be made available under the provident fund.

"This should be a member-friendly scheme. The fund management must be above-board and professional," Biado added. "A provident fund for OFWs is a welcome move because it gives us the possibility of retirement benefits.

"I think it would be best to make membership in such a provident fund optional, along with other privately-run investment schemes like the Platinum Pension Plans, which is open to all Filipinos," said Dick Orense, based in Dubai.

"It should give us choice … the key question is affordability, since some OFWs earn just enough to help their families survive until the next remittance. This idea will need time to take root, but it should be a good start," added Orense, who worked for eight years with the Philippines National Bank, which also has its own employee provident fund.

"The PNB employees' provident fund was well managed, that's why it's successful."

Orense is now manager of Exxel Services, Dubai Economic Development Department-registered company.

Some OFWs are critical of OWWA's credibility to manage the retirement plan. "The low public confidence on OWWA is like an immovable mountain right now," said one disgruntled OFW in Dubai, who asked not to be named.

"It made a lousy decision in investing more than P560 million in the Smokey Mountain Project during (President Fidel) Ramos' time. That was supposed to have been collected in 1999, with interest, at P641 million. I haven't seen an OWWA financial report in recent years. It used to be more transparent. How can they justify collecting money from us for any new scheme?"

This cynicism was not shared by Ric Roces, a Filipino community leader in Ajman. Roces said he personally welcomes the scheme.

"Why not give it a try? Providing a one-stop window for different services offered to OFWs would be a good idea," said Roces.

Bonifacio. © Gulf News
"Making membership to the OFW provident fund optional would defeat the purpose," Roces opined. "The experience of other countries will show that making membership in the provident fund compulsory is a key ingredient to making it work."

He points out, for example, that the insurance scheme offered by OWWA, which has a yearly premium of $25, though compulsory for first-timers, is also optional to returning OFWs.

OWWA Administrator Wilhelm Soriano proposed that under a conceptual framework his office has drawn up, the OFW's would manage the fund themselves – or their representatives.

Research on the baseline minimum and maximum wages of OFWs is assessing their financial capability to set up the fund while existing retirement packages offered by the public and private insurers is also being studied as to their fitness for the OFW provident fund.

Filipinos in the UAE will stand to benefit from the scheme, said Soriano, as the Emirates' liberal financial policy allows Filipinos based here to take part in this scheme.

"The OFW provident fund is one of the key agenda of the Arroyo government … though still in the exploratory stage," said Ferdinand Roxas, Supervising Senior Welfare Officer based in Abu Dhabi.

"The mechanics have yet to be finalised. But it must clear some hurdles since the Migrant Workers Act of 1995 forbids the collection of additional levies or charges from OFWs other than the existing ones," said Roxas.