THE Bangko Sentral ng Pilipinas (BSP) reported on December 16 that the value of contributions in the Personal Equity and Retirement Account (PERA) hit P237 million in September this year, up 62 percent from the P144 million recorded in the same month last year.
In a statement, the Central Bank attributed the increase to the promotion of the retirement savings program for Filipino families, especially those working abroad.
“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 E. Diokno was quoted in the statement as saying.
As of the third quarter of the year, there were a total of 4,001 PERA contributors. Contribution from full-time employees comprised 70 percent of the total at 2,827, followed by self-employed individuals at 15 percent of 590 individuals. Overseas Filipino Workers (OFWs) also comprised around 15 percent of PERA contributors.
PERA is a voluntary retirement savings program created under Republic Act 9505 (An act establishing a provident personal savings plan, known as the PERA). This platform supplements existing retirement benefits from the Social Security System, Government Service Insurance System, and private employers. Anyone with a Tax Identification Number can be a PERA contributor.
An individual may contribute a maximum of P 100,000 while OFWs can put up to P 200,000 annually. By the time the contributor reaches 55 years old and has invested in PERA for at least five years, they can redeem the PERA investment tax-free.
The BSP statement said the central bank designed a roadmap for the end-to-end digitalization of PERA, following its launch in September 2020. Seedbox Philippines, the digital platform provider of PERA, is an open-architecture platform that allows individuals to invest in PERA funds from different fund providers depending on their needs.
Among the benefits of the PERA include a 5-percent income tax credit on the PERA contribution that can be used to pay income-tax liabilities. OFWs can claim this tax credit against any internal revenue tax liability in the country.
All income earned from investments and reinvestments are also exempted from taxes on investment income.