More Pinoys saving money for retirement – BSP

by Lawrence Agcaoili – The Philippine Star, 17 Dec 2021

MANILA, Philippines — Placements under a voluntary retirement savings program jumped by 62 percent to P237 million as of end-September from a year ago as more Filipinos are opting to save more, according to the Bangko Sentral ng Pilipinas.

BSP Governor Benjamin Diokno attributed the increase in the value of Personal Equity and Retirement Account (PERA) to the central bank and partner providers’ promotion of the retirement savings program for Filipino families, especially those working abroad.

As of the third quarter, Diokno said there were 4,001 PERA contributors.

The BSP chief said full-time employees accounted for 70 percent at 2,827, followed by self-employed individuals with 15 percent or 590 and overseas Filipino workers (OFWs) with 15 percent or 584.

“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,” Diokno said.

PERA is a voluntary retirement savings program created under Republic Act 9505 that supplements existing retirement benefits from the Social Security System (SSS), Government Service Insurance System (GSIS), and private employers.

Under the program, an individual with a tax identification number may contribute a maximum of P100,000, while OFWs could invest up to P200,000 annually.

By the time the contributor reaches 55 years old and have invested in PERA for at least five years, they can redeem the PERA investment tax free.

Among the benefits of the PERA include a five percent income tax credit on the PERA contribution that could be used to pay income tax liabilities.

For OFWs, the five percent tax credit can be claimed against any internal revenue tax liability in the country. All income earned from investments and reinvestments are also exempted from taxes on investment income.

Lastly, PERA assets are not considered assets for insolvency and estate taxes.

The BSP designed a roadmap for the end-to-end digitalization of PERA, following its launch in September last year. 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.