Only 20% of the 7.6 million Filipinos aged 60 years and above are covered by state-backed mandatory pensions, data from the Philippine Statistics Authority showed. — PHILIPPINE STAR/MICHAEL VARCAS

THE government targets to have five million Filipinos with personal equity and retirement accounts (PERA) in the next five years, as it launched an online platform to make it easier for them to invest.

“The target seems ambitious. But with more than 40 million locally employed Filipinos prior to the pandemic and around 2.2 million overseas Filipino workers, I am optimistic that this goal is easily attainable,” Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said at the launch of the digital PERA on Tuesday.

Republic Act 9505 or the PERA law aimed to encourage Filipinos to save up for their retirement with the new investment tool. It is designed to complement the mandatory contributions made by public and private sector workers. The PERA law was passed in 2008 but only implemented starting December 2016.

With the digital PERA platform, Filipinos can open and access their PERA accounts anytime using a mobile gadget. PERA contributors can add to their investments through InstaPay and other digital means.

PERA also offers tax incentives such as a five percent income tax credit on contributions which could be utilized for settling their income tax liabilities.

Mr. Diokno noted only 20% of the 7.6 million Filipinos aged 60 years and above are covered by state-backed mandatory pensions, citing data from the Philippine Statistics Authority. Retirees on the average receive a monthly pension of P5,123 from the Social Security System and P18,525 from the Government State Insurance System.

“According to a recent survey, we Filipinos tend not to prepare for their own retirement. Specifically, Filipinos only set aside 3.6 months’ worth of income for retirement — way below the regional average of 2.9 years. In terms of expectation, Filipinos believe that savings equivalent to 2.1 years’ worth of personal income would be enough for retirement. This is the lowest expectation in Asia compared with the regional average of 12 years,” Mr. Diokno said.

The BSP chief said it is important that voluntary retirement savings plans such as PERA would supplement state-based pension plans. 

Only 1,586 Filipinos have utilized the facility as of July, with total contributions of P137 million, Mr. Diokno said. Majority or 69% of contributors are locally employed, while 17% are overseas Filipino workers (OFWs) and 14% are self-employed.

“OFWs have higher contributions at P110,000; local employed workers at P82,000; and the self-employed at P76,000. These figures remain regrettably low,” Mr. Diokno said.

A person aged 18 or older can contribute a maximum of P100,000 yearly under the PERA platform, but the amount may reach up to P200,000 for OFWs.

The development and upgrade of the PERA registry system was funded by the Asian Development Bank. Phase 2 of the ADB-funded project covers the development of the Bureau of Internal Revenue’s (BIR) ePERA system, which will facilitate the processing of electronic tax credit certificates and accept reports from PERA administrators. — LWTN