MANILA, Philippines?Filipinos are expected to save more money now that Congress has ratified the Personal Equity and Retirement Account (PERA) bill, said Senator Edgarda Angara, author of the bill.

The Philippines? savings rate of 23 percent of gross domestic product would easily shoot up 34-40 percent over the medium term with help from the proposed new law, he said.

The PERA bill provides, among others, that income from contributions to the personal retirement account will not be subject to income tax. PERA investors will also be entitled to tax credits equivalent to five percent of their contributions to retirement accounts, said Angara, chairman of the Senate committee on banks, financial institutions and currencies.

Employers that will contribute to their employees? retirement accounts may deduct the contributions from their taxable incomes, he said.

Personal retirement accounts may be opened in banks, mutual funds and other financial institutions, he added.

PERA contributions should be only put in relatively secure investments that will be identified in the proposed law?s implementing guidelines, Angara said.

The Congress bicameral conference committee passed the PERA bill Tuesday. The bill is up for signing into law by President Gloria Macapagal-Arroyo.

Under the bill, the central bank and the Department of Finance will be tasked to issue the implementing rules and regulations to put the law into effect.

Angara said the PERA bill would primarily benefit overseas Filipino workers (OFWs) and Filipinos who are not members of the pension funds Social Security System (SSS) and Government Service Insurance System (GSIS).

?The bill draws from the experience of overseas Filipino workers who make a huge contribution to our economy in terms of foreign remittances,? he told reporters. ?The remittances provide for their families? present consumption?buying a house, paying for their kids? tuition, setting up small businesses?but leave very little savings for one?s retirement.?

He added that small-scale businessmen not covered by the SSS or GSIS would also benefit from the PERA bill.

Angara estimated that 22 percent of the country?s labor force of 35.81 million are outside coverage of the SSS or the GSIS. Michelle V. Remo; edited by INQUIRER.net