‘BEST PRACTICES ON RETIREMENT PLANNING IN LOCAL GOVERNMENT

UNIT IN FIRST CONGRESSIONAL DISTRICT OF CAMARINES SUR’

NTRODUCTION

Background Context and Information

Retirement plan becomes an important area of focus in the field of personal finance, especially
with respect to employees in local government units (LGUs), where hurdles often hinder them
from attaining an economically secure future. The towns that comprise the First Congressional
District of the province of Camarines Sur, Ragay, indeed boast the significance of planning for
retirement although little attention is given to it. A growing number of public employees
throughout the Philippines are beginning to hit the retirement age, raising considerable concern
about their financial security thereafter. In this region, many government employees are
grappling with the issue of having insufficient savings or financial means with which to live out
their old age postretirement. This problem is becoming increasingly evident in Camarines Sur
due to lower salaries, limited pension benefits, and rising costs of living, all of which raise
difficulties for government employees when it comes to saving for retirement. Locally, there is
often quite a lack of focus on retirement planning and a significant gap between what
employees hope for in retirement and what they can actually afford.

In the First Congressional District of Camarines Sur, employees of LGUs particularly face
distinct challenges in their preparations for retirement. Each LGU has different resources and
pension policies, which often leads to variations in the retirement benefits that employees
receive. This creates a difference in how prepared an employee can be for retirement,
depending on the LGU they work in. Also, there is generally a dearth of education or assistance
on the financial aspects of retirement specifically to LGU employees, resulting in many being
completely unprepared. Therefore, these issues require looking closely at the current retirement
planning in these communities to integrate best practices into their lives, closing the gap
between all employees' retirement goals and their real financial realities.
Identifying the Gaps in Literature

While there has been research in general on retirement planning, studies relevant to LGU
employees from the First Congressional District in Camarines Sur are somewhat scarce. It is
important to note that most retirees within the Philippines live in abject poverty, but most studies
overlook the unique issues within local government sector employment. Though LGU
employees do refer to permanent, casual, or contractual employees, such employees do not
enjoy equal retirement benefits and challenges. No research examined how LGU employees
from Ragay and adjacent places plan for retirement as well as the challenges they face due to
different policies and lack of resources. Through the study, I hope to plug this gap by focusing
on the retirement needs of LGU employees within this district, given the peculiar circumstances
they are bound within and the scant data available.

Moreover, past research on retirement in the Philippines has focused on the private sector and
has often ignored issues in the public sector. By focusing specifically on LGUs in Camarines
Sur, I hope to plug the various gaps in retirement planning research that were otherwise
ignored, including different policies of pensions and lack of financial literacy programs. This
study intends to collect and analyze specific data that would clarify local-level retirement
planning challenges facing LGU workers.
The core intention of this research is to produce better insights and practical suggestions on
retirement planning that precisely address the needs of LGU employees in Ragay and
surrounding areas in Camarines Sur. Upon completion of the study, I will be one step closer to
establishing a set of best practices local governments may adopt towards improving retirement
outcomes for their staff.Moreover, the findings of this research could guide policymakers in
ensuring that there is an awareness of the current state of retirement planning laid down for
LGU employees and help draw up introductory financial education programs for such workers.

Finally, the findings of this study might be influential in helping LGUs from the First
Congressional District of Camarines Sur in their endeavor for better retirement preparation for
their employees. The findings-which could be looked upon as a meaningful addition to those
effecting similar changes - could go a long way toward yielding an even greater understanding
of retirement planning within the public sector. It is meant, then, to highlight the importance of
retirement planning and propose recommendations on how LGUs could help their employees
attain financial security in the future.

THEORETICAL FRAMEWORK

This study examines best practices in retirement planning within Local Government Units
(LGUs) in the First Congressional District of Camarines Sur. The research will utilize a multi-
theoretical framework, integrating several established theories to provide a comprehensive
understanding of the factors influencing retirement planning effectiveness.

Using Life Cycle Hypothesis (Modigliani & Brumberg, 1954): This hypothesis forms the
foundation of the framework. It posits that individuals plan their consumption and saving
behavior across their lifespan, aiming to maintain a stable consumption level despite fluctuating
income. This involves saving during working years to finance consumption during retirement.
The study will examine how well LGU practices align with this life-cycle perspective.

Human Capital Theory (Becker, 1964): This theory emphasizes the importance of investments
in human capital (knowledge, skills, experience) for increased productivity and economic well-
being. In the context of retirement planning, this translates to the value of training and
development programs that equip employees with the financial literacy needed to make
informed decisions about their retirement savings. The research will assess the role of such
programs in LGUs.

Social Exchange Theory (Blau, 1964): This theory suggests that relationships are based on
reciprocal exchanges. Within the context of retirement planning, the LGU and its employees
engage in a social exchange: the LGU provides benefits and support (pension schemes,
healthcare), and employees contribute their labor and expertise. The study will explore the
fairness and equity of this exchange, examining whether employees perceive the LGU's
retirement provisions as adequate and just.

Equity Theory (Adams, 1965): This theory focuses on individuals' perceptions of fairness in
relation to others. Employees compare their retirement benefits and opportunities to those of
others (both within and outside the LGU). The study will investigate whether employees
perceive equity in the LGU's retirement planning provisions, and how this perception influences
their satisfaction and engagement with the system.

Theoritical paradigm

Human capital Social exchange

Life cycle
hyphothesis

Equity
Theory