PERA contributions climb

MORE FILIPINOS invested in the electronic Personal Equity and Retirement Account (PERA), with contributors almost tripling since an online platform for the investment tool was introduced in 2020, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

Digital PERA contributors grew to 4,892 as of Sept. 8 from the 1,684 recorded two years prior.

Contributions also rose by 106% to P289.82 million from P140.76 million recorded in the same period in 2020.

Investments from Filipino employees represented 67.43% or P195.42 million of total PERA contributions. The rest of the contributions came from overseas Filipino workers (OFWs) and self-employed individuals.

“The BSP encourages Filipinos to take full advantage of the benefits offered under PERA, including the exemption of PERA earnings from taxes on final withholding, capital gains, and regular income,” the central bank said in a statement.

The BSP launched Digital PERA in September 2020 to attract more individuals to put their funds in these investment products. It is an online one-stop shop where investors can browse PERA products, transact, and monitor their investments.

The PERA Law or Republic Act 9505 was passed in 2008 with the goal of encouraging Filipinos to save up for their retirement via a new voluntary investment product.

Launched in 2016, the PERA is a voluntary fund scheme meant to supplement retirement benefits from the Government Service Insurance System or the Social Security System, as well as private employers.

A person aged 18 or older can contribute a maximum of P100,000 yearly under the PERA platform, but the amount may be as much as P200,000 for OFWs. The BSP has said there may be a need to adjust these contribution caps to account for inflation.

PERA contributors benefit from perks like exemptions from final withholding, capital gains and regular income taxes. They are also entitled to a 5% tax credit on contributions for the year, which can be used to pay or lower annual income tax due.

Income generated from PERA contributions are tax-free up to the P100,000 cap, and may be reinvested unless withdrawn ahead of retirement.

The contributions will be invested in other products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities for the money to grow, the proceeds of which may be claimed once a person reaches the age of 55 or has invested in the fund for at least five years. The money may be claimed on a periodic or lump sum basis. — K.B. Ta-asan