By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK is eyeing to set up an online marketplace for the personal equity and retirement account (PERA), in a bid to attract more investments for the two-year-old savings scheme.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said they have received proposals to create a digital space to popularize the investment tool among the public.
“One way to leapfrog the growth of the PERA market in the Philippines is to go digital. On this note, the BSP recently received proposals to provide digital solutions across the PERA ecosystem,” Ms. Fonacier said in a speech delivered on behalf of BSP Governor Nestor A. Espenilla, Jr.
Launched in 2016, the PERA stands to complement mandatory contributions for workers through the Government Service Insurance System (GSIS) for state employees and the Social Security System (SSS) for those in the private sector. However, signing up for the PERA is voluntary, against the automatic salary deductions for premium payments to the state-run pension firms.
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 investment product. However, implementation has been stalled as issues on taxation and regulation took a while to resolve.
Appetite for PERA has been low since it was rolled out in December 2016, Ms. Fonacier said.
“Some of the challenges we need to tackle include limited accessibility, volume of on-boarding requirements, fee structure, and tax regulatory concerns,” the BSP official added, noting that bringing the investment toll online will allow more Filipinos to contribute to the fund.
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 overseas Filipino workers. A qualified contributor may place money in five PERA accounts at once across five recognized investment products. In turn, the individual can enjoy a 5% tax credit that can be deducted in his/her annual tax liabilities to encourage saving up for the future.
Ms. Fonacier said the PERA will also help deepen the country’s local debt market, as it would convert savings into investable funds that can be tapped by Philippine corporates for capital.
She added that PERA can also ride on the National Retail Payment System pioneered by the central bank “to reduce transaction costs,” which would also provide easier access to retail clients and even overseas Filipino workers.
Income generated from PERA contributions would be tax-free up to the P100,000 cap, and may be reinvested unless withdrawn ahead of retirement.
The contributions will then 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 by on a periodic or lump sum basis, and will be released on top of pensions from the SSS or GSIS.