Languishing retirement fund law gets BSP boost

Bangko Sentral ng Pilipinas. INQUIRER.net FILE PHOTO

The implementation of a six-year-old law that would make it easier for ordinary citizens to put up retirement funds came one step closer last week, as regulators approved yet another set of rules for investment managers.

The Bangko Sentral ng Pilipinas (BSP) at the weekend announced the approval of guidelines for the accreditation of Personal Equity Retirement Act (Pera) market participants.

Under the guidelines, market participants are defined as administrators, investment managers and custodians of either the cash balances of Pera clients or their investments in Pera-eligible securities. The guidelines also provide specific details for handling Pera-related processes such as account opening, administration, withdrawal and termination.

“The Monetary Board’s approval of the guidelines brings us closer to providing each Filipino with an effective tool for securing his future,” BSP Governor Amando M. Tetangco Jr. said.

Tetangco described the Pera law as “an excellent vehicle for achieving one’s personal goals.”

Signed into law in 2008, Pera aims to put in place a system that would replicate 401-K accounts in the United States, which allow salary earners to set up tax-free investment funds for their retirement. Apart from helping people save, the law also aims to mobilize people’s savings by placing it in financial markets and allowing it to go to “productive activities.”

A new inter-agency board was also being formed by representatives from the BSP, the Bureau of Internal Revenue, Insurance Commission, and the Securities and Exchange Commission. This body will ensure the smooth implementation of Pera by the scheduled launch date this January.

The guidelines approved by the central bank last week provide rigorous standards for banks and trust entities which may have an interest to function as a Pera market participant. This ensures that only those which meet the high standards will deal with the public.