CONTRIBUTIONS of voluntary members in the Personal Equity and Retirement Account (PERA) reached P329.55 million in 2022, the central bank said on Tuesday.

Data from the Bangko Sentral ng Pilipinas (BSP) showed PERA contributions climbed by 30% last year, from P253.35 million in 2021.

The number of PERA contributors also jumped by 16% to 5,100 in 2022 from 4,382 in 2021, the BSP said.

About 3,600 employed individuals contributed P223.71 million to the fund last year. This is followed by overseas Filipino workers (721) and self-employed individuals (785) who invested P60.58 million and P45.25 million, respectively.

“The increase in both the size of funds in investment and contributors shows that there is a demand for supplementary outlets for retirement planning purposes,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

“The PERA legislation helped address the need for alternative investment outlets and it’s a positive sign to see that contributors are able to take advantage of the PERA law to jumpstart or build their retirement funds further,” he added.

Republic Act 9505 or the PERA law was passed in 2008 with the goal of encouraging Filipinos to save up for their retirement through a 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.

Under the law, contributors aged 18 or older can make a maximum annual investment of P100,000 in their PERA account, while overseas Filipinos are allowed to invest up to P200,000 a year. The BSP has said there may be a need to adjust these contribution caps to account for inflation.

The PERA law also offers various tax incentives to contributors such as tax exemptions on earnings from PERA investments, a 5% income tax credit on contributions which could be used for paying income tax liabilities, and a tax-free distribution on qualified withdrawal of PERA investments.

When a contributor reaches 55 years old and an investment period of at least five years, he or she can redeem the PERA investment free of taxes.

“Higher returns on contributions likely prompted Filipinos to save more in their PERA accounts. Financial savvy customers would take advantage of better returns on their idle money,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message. 

Ms. Velasquez said job market improvements may have encouraged Filipinos to save more.

“As workers see better employment prospects, they have more opportunity to save more,” she said. 

The Philippines’ unemployment rate eased to a three-year low of 5.4% in 2022, equivalent to 2.67 jobless Filipinos. In 2021, the unemployment rate stood at 7.8%, equivalent to 3.71 million.

Ms. Velasquez said an increase in the deployment of overseas Filipino workers (OFWs) last year may have also lifted contributions to PERA.

In September 2020, the central bank launched the digital platform for PERA to make it more accessible to contributors.

“As an online marketplace, the digital PERA facilitates greater convenience and efficiency by enabling Filipinos to open PERA accounts, choose among different accredited PERA products, and settle PERA transactions electronically using their mobile phones or other digital devices,” the BSP said. — Keisha B. Ta-asan