More Filipinos setting up retirement fund, says BSP
Efforts to get more Filipinos to prepare for retirement are bearing fruit with contributions to a Personal Equity and Retirement Account (PERA) growing by almost two-thirds—62 percent—year-on-year to a total of P237 million last September from P144 million in the same month of 2020, according to the Bangko Sentral ng Pilipinas (BSP).
The regulator said in a statement such growth “may be attributed to the BSP and partner providers’ promotion of the retirement savings program for Filipino families, especially those working abroad.”
BSP data showed that as of the third quarter of this year, there are 4,001 PERA contributors, of whom 70 percent or 2,827 are employed full-time.
Among the contributors, 590 or 15 percent of total are self-employed while 584 are overseas Filipino workers (OFWs).
“We continue to actively promote financial security and encourage more Filipinos to plan for retirement and set aside funds for their sunset years through PERA,” BSP Governor Benjamin Diokno said. To support this thrust, the BSP designed a road map for the end-to-end digitalization of PERA.
Seedbox Philippines, which has been tapped as the digital platform provider of PERA, offers an open-architecture platform that allows individuals to invest online in PERA funds from different fund providers depending on their needs.
Instituted through Republic Act No. 9505 of 2008 but became fully operational only in 2016, PERA is a voluntary retirement savings program that augments retirement benefits from the Social Security System, Government Service Insurance System, and private employers. Anyone with a Tax Identification Number is qualified for the PERA. OFWs may contribute up to P200,000 yearly. Other contributors may chip in half of that.
Upon reaching 55 years of age, a contributor who has invested in PERA for at least five years may redeem the PERA investment tax-free.
Contributors are also entitled to a 5-percent income tax credit, which may be used to pay income tax liabilities. OFWs may claim this credit against any internal revenue tax liability in the Philippines. Further, all income earned from investments and reinvestments are also exempted from taxes on investment income.
