Barely two years after the Bangko Sentral ng Pilipinas (BSP) launched this digital program in 2020, the number of Personal Equity and Retirement Account (PERA) contributors is said to have already grown more than 2-folds this year.
The Digital PERA is an online one-stop shop where investors can conveniently open an account, browse various PERA products, monitor their PERA accounts, and settle transactions via InstaPay and PESONet.
According to the BSP, PERA contributors increased to 4,892 on September 8 this year, up from the 1,684 that was recorded two years prior.
The total PERA funds also rose along with the number of PERA investors, as total PERA contributions were reported to have reached P289.82 million as of September 8, 2022, or a 106% increase from the P140.76 million that was recorded for the same period in 2020.
Contributions from Filipino employees represented 67.43 per cent of the PERA contributions or P195.42 million. The rest of the contributions, meanwhile, came from Overseas Filipino Workers and self-employed individuals.
PERA is a voluntary retirement savings program that supplements state-based pension plans (i.e., from Social Security System and Government Service Insurance System), and employer-sponsored retirement plans.
It was introduced by the BSP in 2016, with support from the financial industry.
Why PERA?
Retirement is a long, long way for many Filipinos. While still young and able, the BSP thought it would be ideal for Filipino adults to set aside money so they can enjoy the fruits of their labour in their senior years.
According to the Philippine Statistics Agency (PSA), most Filipinos rely on government-mandated pension plans like the Social Security System (SSS) for private employees and the Government Service Insurance System (GSIS) for government workers.
The pension plans being made available in these options, however, are quite low.
The latest PSA data show that SSS pensioners only earn an average of P5,123 while GSIS pensioners get a slightly higher average of P18,525. Given today’s expenses, a typical senior citizen will clearly not be able to survive on these pension funds alone.
Thus comes PERA.
PERA came into existence due to Republic Act 9505, a law passed in 2008 that provided for a new (but not mandatory) personal savings plan for Filipinos. It was, however, not until 2016 that Filipinos were actually able to open accounts for themselves. This is because government bodies such as the Bangko Sentral ng Pilipinas (BSP) and the Bureau of Internal Revenue (BIR) still had to hurdle several ‘blockers’ to allow for its implementation.
PERA’s benefits include:
- Five per cent (5%) tax credit, which you can use to offset your income tax liabilities.
- Tax-free for income derived from investments (and reinvestments) in PERA.
- For the purpose of insolvency and estate taxes, your money in PERA will not be considered an asset.
The BSP is thus encouraging every Filipino to take full advantage of the benefits now being offered under PERA, a digital program that also forms part of the central bank’s thrust to promote financial inclusion for all.