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SEN.
Edgardo Angara gave assurances Thursday that the final
version of the Personal Equity Retirement Account (Pera)
bill will be ratified by the Senate and the House before
Congress goes on a monthlong recess next week.
Appearing at the weekly Kapihan sa Senado media forum,
Angara said the Pera bill would complement the expected
passage of the proposed Pre-need Code.
Leaders
of both chambers of Congress have acknowledged the need
to establish a long-term savings plan and engage in
sound investments to secure limited financial resources
amid skyrocketing prices of food and oil products.
According to Angara, “these limited resources must be
placed in two viable investment vehicles—the Pera bill
and the Preneed Code—not only to spur personal financial
growth but to eventually help achieve a strengthened
capital market.”
“If we
tie this [Preneed Code] up with Pera, which will be
passed by next week, this will become a provident fund
that will encourage savings and mobilize and strengthen
the capital market, [which] will eventually result in
reduced interest costs,” added Angara.
He made
the remarks a day after Philippine Stock Exchange
president Francis Lim revealed plans to tap the military
and other professional groups as potential investors in
the stock market.
“We are
doing this in anticipation of the passage of the Pera
bill,” said Lim. Angara said the Pera bill’s benefits
could also be availed of by non-GSIS or SSS members who
do not have any retirement fund to look forward to.
“With Pera, you can contribute at least P100,000 a year,
withdrawable at age 55, and tax-exempted, too.”
The Pera
bill sponsored by
Angara as
chairman of the Senate banks committee seeks to
supplement the existing government-sponsored pension
scheme by setting up a privately-funded retirement fund
to reduce heavy reliance on the already overwhelmed
government retirement schemes.
Pera
also targets overseas Filipino workers and small
business owners since they are not covered by the
government’s current pension programs.
During
the Kapihan forum, Angara reported that after Wednesday
night’s marathon floor deliberations, “the Pre-need Code
is as good as passed.”
He said,
“There is now a ruling or governing legal framework for
the preneed industry. Before, there was no system and it
was more like an ‘anything goes’ attitude. But now, we
have safeguards,” he said, and added, “[The Preneed
Code] also contains a body of disclosure rules. For
transparency, we now require full disclosure of the
company’s income as well as its contributions to the
trust fund.”
Also,
preneed salesmen will be required to undergo a licensing
exam before they can sell preneed plans. “With many
safeguards in place, I think the chance of preneed
companies becoming insolvent is nil. The industry will
now become stronger and planholders can now sleep
safely.”
Angara
added that the code likewise provides that the industry
will now be governed by the Securities and Exchange
Commission, noting that “preneed is more like buying a
security than an insurance policy.”
Under
Angara’s bill, preneed companies must have a minimum
paid-up capital of P100 million to provide a solid
capital base and lessen the risk of instability in the
future.
The
bill also pegs minimum contribution of a preneed company
to the trust fund at 45 percent of the amount collected
for life plans, and 51 percent for all other types.
The
trust fund may be invested in (1) fixed income
instruments such as government securities, savings or
time deposits, commercial papers or direct loans; (2)
mutual funds; (3) equity investments in stocks; and (4)
real estate. |
