The Philippines has the potential to become a premier retirement destination and top global retirement choice if it can leverage its natural beauty, affordability, and cultural warmth. A recent study by the Philippine Institute for Development Studies (PIDS) highlights the country’s potential to attract more retirees as well as the need for the Philippine Retirement Authority (PRA) to enhance policies and services and address challenges in program efficiency, affordability, and security.
Titled “Philippine Retirement Authority Policy Development with Impact Assessment”, the study was authored by University of the Philippines Professor Emeritus Epictetus Patalinghug, PIDS Senior Research Fellow Dr. Aubrey Tabuga, and other PIDS researchers. It provides a comprehensive evaluation of the costs, benefits, and operational challenges associated with the PRA’s Special Resident Retiree Visa (SRRV) program, which has been in operation since 1987.
As a government agency under the Department of Tourism, the PRA plays a central role in positioning the Philippines as an attractive retirement destination. Its SRRV program offers foreign retirees multiple-entry and indefinite stay privileges, which contribute to the national economy by generating foreign exchange and boosting tourism. But the study reveals that the program’s effectiveness has been hindered in recent years by rising operational costs and the additional challenges caused by the COVID-19 pandemic. “While the forecast volume of retirees is on an upward trend, it is still lower than pre-pandemic levels,” the authors noted.
One important factor influencing the program’s success has been its minimum age requirement for retirees. Originally set at 50 years old, the program incurred more costs than benefits when reliant on government funding. However, after lowering the age requirement to 35 in 1993, the program became self-sustaining and began to generate positive returns. Despite this success, the study highlights that attracting retirees has become increasingly costly since 2016, underscoring the need for reforms to ensure the program’s long-term viability.
To address these challenges, the study presents three reform options for the SRRV program.
The first option suggests following the Malaysian model, which involves raising visa fees to align with Malaysia’s rates and limiting the SRRV to a single-entry visa valid for five years.
The second option maintains the current $20,000 fee but introduces limits on privileges, such as eliminating automatic renewals and restricting retirees from using their deposits for housing purchases.
The third option proposes a significant increase in the visa fee, ranging from $200,000 to $300,000, while maintaining the existing privileges but targeting a smaller pool of high-net-worth retirees.
According to the authors, “these reforms could either attract a smaller but higher-quality pool of retirees with greater foreign exchange inflows or maintain the current fee structure while selectively targeting retirees aged 50 and older”.
The study also recommends several operational improvements to enhance the PRA’s services. These include streamlining document verification processes at satellite offices to reduce delays, decentralizing certain services to improve convenience for retirees, and strengthening partnerships with banks to expedite the processing of financial documents. In addition, the study emphasizes the importance of increasing staff and resources at satellite offices to better manage the growing number of responsibilities and improve service delivery.
Furthermore, the study advocates for enhancing the PRA’s marketing efforts and simplifying the application process to attract a larger pool of retirees. Building stronger partnerships with embassies and consulates to promote the Philippines as an attractive retirement destination is another key strategy to broaden the program’s reach.
The Philippine retirement industry is economically viable, but a focused business model, market segmentation, and policy reforms are necessary to unlock its full potential, the authors stated.
Read the full study here: https://bit.ly/pidsdp2024-13.
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Other related studies on the PRA retirement program can also be accessed here, respectively: https://bit.ly/pidsdp2024-11 and https://bit.ly/pidsdp2024-12.
