INSURANCE AND PENSION PLANS (source: Insurance Commission) Insurance and pension plans offer alternative source of finances

for overseas Filipinos particularly upon reaching retirement age. Investment in insurance and pension plans assure them and their families of readily available finances in cases of death, health problems and emergency. Companies offering insurance and pension plans offer a variety of benefits accompanying the plan, such as transferability of benefits to heirs, minimum amount for premiums, and assured continuity of benefits and guaranteed full payment even in cases of untimely death or disability during the paying period. The following companies used as an example here belong to the top ten insurance companies in the country based on certain indicators such assets and net income, as certified by the Insurance Commission. You may also visit the Philippine Insurance Commissions website at www.insurance.gov.ph, to see the complete list of licensed and best performing insurance companies.

Top Ten Insurance (Life) Companies Per Category As of 31 December 2008, based on the Insurance Commission http://www.insurance.gov.ph/htm/_statistics.asp Based on Assets Based on Investment at Cost 1. Philam Life & Gen. Ins. Co., Inc. 2. Sun Life of Canada (Phils.) 3. Insular Life Assurance Co., Ltd., The 4.Manufacturer s Life Insurance Co., Inc. The (Phils.) 5. PNB Life Insurance, Inc. Based on Net worth (tentative as of 20 July 2009) 1.Philippine American Life & Gen. Ins. Co., Inc. 2. Insular Life Assurance Co., Ltd., The 3. Sun Life of Canada (Phils.) Inc. 4. United Coconut Planters Life Assurance Corp. 5.Manufacturer s Life Insurance Co., Inc. The (Branch.) 6. Great Pacific Life Assurance Corp. Based on Paid-up capital Based on Premiums Earned 1.Philippine American Life & Gen. Ins. Co., Inc. 2. Sun Life of Canada (Phils.) Inc. 3. Insular Life Assurance Co., Ltd., The 4. Phil. AXA Life Insurance Corp.

1. Philam Life & Gen. Ins. Co., Inc. 2. Sun Life Of Canada (Phils.) 3. Insular Life Assurance 4. Phil. AXA Life Insurance Corp.

1.Philippine American Life & Gen. Ins. Co., Inc. 2. Sony Life Insurance (Phils.) Corp. 3. Ayala Life Assurance, Inc. 4. United Coconut Planters Life Assurance Corp. 5. Sun Life of Canada (Phils.) Inc. 6. Great Life Financial

5.Manufacturers Life Insurance Co., Inc. The (Phils.) 6. Pru Life Ins. Corp. Of U.K.

5. Pru Life Ins. Corp. Of U.K..

6. Ayala Life Assurance Corp.

7. Ayala Life Assurance

7. Phil. AXA Life Insurance Corp.

7. Ayala Life Assurance, Inc.

7. Great Pacific Life Assurance Corp.

6. Manufacturers Life Insurance Co., Inc. The (Branch.)Assur ance Corp. 7. Ayala Life Assurance Generali

8. United Coconut Planters Life Assurance Corp.

8. Generali Pilipinas Life Assurance Co., Inc. 9. Pru Life Insurance Corp. of UK

9. Great Pacific Life

8. Manufacturers Life Insurance Co., Inc. The (Phils.) 9. Phil. AXA Life Insurance Corp.

8. Manufacturers Life Insurance Co., Inc. The (Branch) 9. Pru Life Insurance Corp. of UK

8. Great Pacific Life Assurance Corp.

10. Generali Pilipinas Life Assurance Co., Inc.

10 . Great Pacific Life

10. Beneficial PNB Life Insurance Co., Inc.

10. CARITAS Life

9. United Coconut Planters Life Assurance Corp. 10. Philam Equitable Life

Top Ten Insurance (Non-Life) Companies Per Category As of 31 December 2008, based on the Insurance Commission http://www.insurance.gov.ph/htm/_statistics.asp Based on Premiums Earned 1. Malayan Insurance Company, Inc. 2. Prudential Gtee. & Assce., Inc. 3. BPI/MS Insurance Corporation(FEB Mitsui Marine) 4. Mapfre Asian Insurance Corporation 5. Standard Insurance Company, Inc. 6. Pioneer Insurance & Surety Corporation 7. Philippine Charter Insurance Corporation Based on Gross Premiums 1. Malayan Insurance Company, Inc. 2. Prudential Gtee. & Assce., Inc. 3. BPI/MS Insurance Corporation(FEB Mitsui Marine) 4. Standard Insurance Company, Inc. 5. Pioneer Insurance & Surety Corporation 6. Philam Insurance Company, Inc. Based on Net worth 1. Pioneer Insurance & Surety Corporation 2. Malayan Insurance Company, Inc. 3. BPI/MS Insurance Corporation(FEB Mitsui Marine) 4. Mapfre Asian Insurance Corporation 5 . Tokio Marine Malayan Insurance Co., Inc. 6. Philippine's First Insurance Co., Inc. 7. Petrogen Insurance Corporation 8. Cibeles Insurance Corporation Based on Investments 1. Malayan Insurance Company, Inc. 2. BPI/MS Insurance Corporation(FEB Mitsui Marine) 3. Philam Insurance Company, Inc. 4. Pioneer Insurance & Surety Corporation 5. Mapfre Asian Insurance Corporation 6. PNB General Insurers Company Inc. 7. Cibeles Insurance Corporation 8. Philippine Charter Insurance

7. UCPB General Insurance Company, Inc. 8. UCPB General 8. Federal Insurance Phoenix Company, Inc. Assurance Co.,

Inc.

Corporation

9. Federal Phoenix Assurance Co., Inc. 10. Philam Insurance Company, Inc.

9. Philippine Charter Insurance Corporation 10. Mapfre Asian Insurance Corporation

9. Philam Insurance Company, Inc. 10. Alliedbankers Insurance Corporation

9. Federal Phoenix Assurance Co., Inc. 10. Petrogen Insurance Corporation

For more information you may contact the Insurance Commission at: Insurance Commission 1071 United Nations Avenue Ermita, Manila Tel. Nos. (632) 523-8461 to 70 locals 102-103 Direct line: (632) 404-1758 Email: pubassist@insurance.gov.ph Website: www.insurance.gov.ph B. Pension Plans Pension funds provide retirement income through annuities to employees covered by a pension plan. Funds are obtained through contributions from employees or employers. Pension funds differ in method of payment although the purpose remains the same. The first method of payment known as defined benefit plan guarantees payments of benefits that are not tied to contributions but based on a prescribed formula. Under this type of plan, the sponsor shoulders risk of shortfall in investment returns. The other type of plandefined contribution planboth the employee and the employer contribute specific amounts to the plan periodically. Under the defined contribution plan, the employee bears the risk of accumulated funds not meeting replacement income goal. The Government Service Insurance System (GSIS) and the Social Security System serve as the largest pension funds in the Philippines. These two government administered funds invest in government securities, the stock market, commercial paper, and property development. Their income usually comes from salary and housing loans, interest income in investments, dividends, and foreign exchange gains. Apart from GSIS and SSS, there is another smaller government administered fund: the Armed Forces of the Philippines Retirement Separation and Benefits System (AFP-RSBS). These three public pension funds all fall under, mandatory defined benefit plan. At present, GSIS and SSS experience difficulty in meeting their redistribution goal. Specifically, benefits paid to member have outpaced the amount of contributions of members. Meager returns on investments, poor compliance and enforcement in payment of premiums, low collection rate on loans, huge losses from housing programs, and the lack of regulatory institution threaten the viability of the two government administered pension funds. Nonetheless, there have been initiatives to reform the countrys pension system and enhance its role in capital market development. All in all, insurance and pension plans offer alternative source of finances for overseas Filipinos particularly upon reaching retirement age. Investment in insurance and pension plans assure them and their families of readily available finances in cases of death, health problems and emergency. Companies offering insurance and pension plans offer a

variety of benefits accompanying the plan, such as transferability of benefits to heirs, minimum amount for premiums, and assured continuity of benefits and guaranteed full payment even in cases of untimely death or disability during the paying period. The Social Security System Flexi-Fund The SSS Flexi-fund is a voluntary, provident fund for overseas Filipino workers (OFWs). It is an additional service provided by the SSS on top of the regular OFW membership. The SSS, through the Flexi-fund Program, provides OFWs the opportunity to set aside a part of their earnings abroad and maximize the returns on their Flexi-fund contributions. The accumulated funds are investments for the future. It is offered as a supplement to SSS benefits, which one is entitled to as a regular OFW member, by promoting savings generation, thus serving as an additional layer of social security protection. The Flexi-fund is open to all OFWs who are:

recruited in the Philippines by foreign-based employers for work abroad; having a source of income in a foreign country; or residing permanently in a foreign country.

Benefits As a Flexi-fund member, one will receive additional income from savings in the Flexifund account, on top of the benefits under the regular SSS coverage. Members who reach the retirement age of 60, or become disabled or get injured at work, are entitled to Flexi-fund benefits, either in the form of a monthly pension, lump-sum payment, or combination of both. Beneficiaries of a pensioner who has passed away shall be given a lump sum amount equivalent to the cash value of the remaining pension. A good investment The contributions that are remitted to the SSS Flexi-fund are invested in government securities. The interest earned by the Flexi-fund deposits is based on the average 91-day Treasury bill rate, thus ensuring a transparent, high-yielding and risk-free investment of ones hard-earned income abroad. The SSS Flexi-fund provides good security for ones future and ones family. Primarily, the program aims to supplement ones pension benefits. Aside from this, one may apply for early withdrawal of Flexi-fund savings to support urgent financial needs when ones overseas employment contract ends. It can also be used to finance schooling, construction of a house or a small business. Withdrawal An OFW member may withdraw his Flexi-fund contributions with interest, either in full or partial lump sum, anytime, especially in times of need. Pre-termination fees shall be imposed, however, on withdrawal of accumulated contributions that have stayed in the Fund for less than a year. Computation of pre-

termination fees shall be based on net earnings (interest earnings less operating expenses) at the time of filing of claim. Charges shall be in accordance with the following schedule: Retention/Holding period At time of early withdrawal 6 months and below Within 6-12 months 12 months and above Pre-termination fees 20% of net earnings 10% of net earnings None

For all Flexi-fund benefit claims, including early withdrawals, use SS Form DDR-2, which is available from the SSS website. One may submit the duly accomplished form at any local SSS branch for claim settlement. Difference between the SSS Flexi-fund and regular OFW membership The Flexi-fund is a voluntary provident fund scheme, designed exclusively for OFW members of the SSS. It is a pension plan and savings account rolled into one that enables your money to earn interest. The program provides flexible modes of paying ones contributions, and allows one to easily vary the amount that need to be paid. Ones contributions and earnings are posted to individual Flexi-fund account. Enrollment To enroll in the Flexi-fund, one can register at any SSS foreign representative office located in various countries. One may also download SS Form OW-1 from this web site. After filling out the form, send it by mail or fax to the following address: International Affairs and Branch Expansion Office Social Security System 3/F SSS Bldg., East Avenue Quezon City, 1100 Philippines Telefax: (632) 435-9814 Email: member_relations@sss.gov.ph Website: www.sss.gov.ph In case of local enrollment, submit the duly accomplished SS Form OW-1 at any local SSS branch prior to ones deployment. Present a valid overseas employment certificate (OEC) or E-receipt issued by the Philippine Overseas Employment Administration (POEA) as proof of pending deployment. If an OFW member, who already filed for a full early withdrawal claim, decides to resume his Flexi-fund membership, he is required to register in the program again using SS Form OW-1. Qualification for the SSS Flexi-fund Program One must first be an SSS member before joining the Flexi-fund Program. First-time members should first make sure that their contribution to the regular SSS program is based on the prevailing maximum monthly salary credit. For existing OFW members, present the latest SS Form RS-5 receipt as proof of payment of the maximum contribution amount.

Duration of SSS Flexi-fund contributions One can make deposits to the Flexi-fund account anytime, provided that one continues paying the maximum monthly contribution for the regular SSS membership. Any amount, not lower than P200, paid in excess of the required contribution shall be credited to Flexi-fund and applied with interest. Even when the employment abroad is over, one may still continue the Flexi-fund payments. The opportunity to contribute to Flexi-fund shall cease upon filing of a final claim (retirement, death or total disability benefit) under the regular SSS program. Where to remit Flexi-fund payments Simply fill up SS Form RS-5, which is available at any SSS office abroad, and remit the payment at any of the following accredited collecting banks or companies: 1. Allied Bank 2. Asiatrust Bank 3. Bank of the Philippine Islands (BPI) 4. Equitable PCI Bank 5. International Exchange Bank 6. Land Bank of the Philippines 7. Metrobank 8. Philippine National Bank (PNB) 9. Rizal Commercial Banking Corporation (RCBC) 10. Security Bank 11. Luzon Brokerage Corporation (LBC) SAMPLE ILLUSTRATION OF LUMP SUM BENEFITS UNDER THE SSS FLEXI-FUND PROGRAM FOR OFWS Interest under the SSS Flexi-fund is

Tax-free Based on prevailing 91-day Treasury bill rates, quoted on a per annum basis Subject to quarterly re-pricing, to make it more reflective of current market conditions Computed at actual date of payment of Flexi-fund contributions, and posted to individual accounts at the end of the month Compounded monthly, such that earnings at the end of each month are taken into account in the computation and application of earnings in the succeeding months CASE 1: MONTHLY CONTRIBUTION PAYMENT OF P2,000 Contribution Period Total Contributions (in years) Paid 3 5 10 15 72,000 120,000 240,000 360,000 Lump-sum Benefit Amount* 78,994 139,876 327,091 577,665

20 25 30

480,000 600,000 720,000

913,042 1,361,920 1,962,714

CASE 2: ONE-TIME CONTRIBUTION PAYMENT OF P100,000 Contribution Period Total Contributions (in years) Paid 3 5 10 15 20 25 30 100,000 100,000 100,000 100,000 100,000 100,000 100,000 Lump-sum Benefit Amount* 119,113 133,843 179,140 239,767 320,911 429,518 574,880

* Actual amount of lump-sum benefits depends on actual interest rate re-pricing

C. Pre-need plans Pre-need companies offer education, pension, and memorial plans. Based on the Rules on Pre-Need of the Securities and Exchange Commission (SEC), pre-need plans are contracts that provide for the performance of the future service(s) or payment of future monetary consideration at the time of actual need, payable either in cash or installment by the plan holders at prices stated in the contract with or without interest or insurance coverage and includes life, pension, education, internment and other plans which the commission from time to time approve. Pre-need plans come in two forms: open-ended and fixed value plans. Open-ended, actual cost or traditional plans are acquired through fixed costs and delivered to the beneficiary based on actual costs upon the period of availment. They, however, expose preneed firms to risks of not being able to service maturing obligations. Fixed-value plans are plans in which the amount of the benefit fixed at the time of purchase. These plans may yield returns below inflation rates but have features to compensate for it. In the Philippines, pre-need pension plans usually have the following features: a.) Payment of contract price averages five years, which can be made in monthly, quarterly or yearly installments.

b.) Maturities of pre-need pension plans are either upon reaching a certain age of the plan holder or over a period of years after full payment. c.) Pension benefits may be paid out in lump sum or installments or both at the option of the plan holder. d.) In case of death of the plan-holder before the maturity date, pay-out will still be at maturity date. e.) To ensure payment of benefits, pre-need companies are required to contribute to a Trust Fund which are funded from their collection A number of pre-need companies are subsidiaries of banks or insurance companies. Pre-need firms are regulated by the SEC and not subject to liquidity requirements imposed by the central bank. Recently, however, a few of the big pre-need companies have experienced financial difficulties and failed in fulfilling their contractual obligations to their clients. The following companies have been given licenses to sell plans for 2009 by the Securities and Exchange Commission upon satisfactorily passing the SEC requirements. 2009 Pre-need plans licensed by the SEC 1. AMA Plans, Inc. 2. Ayala Plans, Inc. 3. Caritas Financial Plans, Inc. 4. Cityplans, Inc. 5. Cocoplans Inc. 6. Danvil Plans, Inc. 7. Destiny Financial Plans, Inc. 8. Eternal Plans, Inc. 9. First Country Plans, Inc. 10. First Union Plans, Inc. 11. Grayline Plans, Inc. 12. Himlayang Pilipino Plans, Inc. 13. Loyola Plans Consolidated, Inc. 14. Manulife Financial Plans, Inc. 15. Mercantile Careplans, Inc. 16. Paz Memorial Services, Inc. 17. Permanent Plans, Inc. 18. Philam Plans, Inc. 19. Provident International Plans, Inc. 20. Prudentialife Plans Inc. 21. St. Peter Life Plan, Inc. 22. Sun Life Financial Plans, Inc. 23. Transnational Plans, Inc. 24. Trusteeship Plans, Inc. (from http://blogs.inquirer.net/moneysmarts/2009/02/12/pre-need-companies-with-seal-ofgood-housekeeping-from-sec/ )

The following list, on the other hand, is composed of companies willing to shell out more money to beef up their capital this year, in anticipation of difficulties in growing their trust funds due to the current rate of return of financial instruments in the market:

1. Ayala Plans, Inc. 2. Cocoplans Inc. 3. Danvil Plans, Inc. 4. Eternal Plans, Inc. 5. First Union Plans, Inc. 6. Himlayang Pilipino Plans, Inc. 7. Ideal Pension Plans Corp. 8. Loyola Plans Consolidated, Inc. 9. Manulife Financial Plans, Inc. 10. Mercantile Careplans, Inc. 11. Pacific Plans 12. Paz Memorial Services, Inc. 13. Permanent Plans, Inc. 14. Philam Plans, Inc. *did not sign agreement because it says its trust fund is more than sufficient. 15. Provident International Plans, Inc. 16. Prudentialife Plans Inc. 17. St. Peter Life Plan, Inc. 18. Sun Life Financial Plans, Inc. 19. Transnational Plans, Inc. 20. Trusteeship Plans, Inc.