Effects of Pension Payments on Savings in the Philippines

by Rouselle F. Lavado

East-West Center Working Papers, International Graduate Student Conference Series, No. 23

Publisher: Honolulu: East-West Center
Publication Date: 2006
Binding: paper
Pages: 16
Free Download: PDF


This paper attempts to provide some empirical evidence on the effects of social security on savings mobilization of households. While it has been empirically established in developed countries that pension system has important effects on savings, no important study has been established yet in the Philippines. Following Feldstein's model, consumption and savings function using a household survey data was estimated. This study aims to contribute to the pension literature by using the Kaplan-Meier duration model to estimate survival probabilities. The findings indicate that there is a negative effect of pension on household savings. The Social Security System and the Government Service Insurance System are viewed by current contributors as future wealth and thus, they tend to consume more now and save less than they would have if there were no pension.