Personal Equity and Retirement Account PERA / Republic Act 9505 is a law passed in 2008 that encourages Filipinos
to invest for retirement. It’s like the USA’s Individual Retirement Account (IRA).
The guidelines were officially passed by BSP in 2016.
Any legal age Filipino can open a PERA account and deposit funds there,
to be grown until retirement.
The funds can be withdrawn come 55 years old (as long as at least 5 years have passed).
to invest for retirement. It’s like the USA’s Individual Retirement Account (IRA).
The guidelines were officially passed by BSP in 2016.
Any legal age Filipino can open a PERA account and deposit funds there,
to be grown until retirement.
The funds can be withdrawn come 55 years old (as long as at least 5 years have passed).
A good comprehensive introduction from BSP on PERA is here:
http://www.bsp.gov.ph/downloads/primers/PERA%20FAQs.pdf
http://www.bsp.gov.ph/downloads/primers/PERA%20FAQs.pdf
Valid investment instruments are:
i) unit investment trust fund;
ii) shares of stock of mutual funds;
iii) annuity contract;
iv) insurance pension product;
v) pre-need pension plan;
vi) share of stock or other security listed and traded in a local exchange;
vii) exchange-traded bond;
viii) government securities; and
ix) any other category of investment product or outlet allowed for PERA purposes.
i) unit investment trust fund;
ii) shares of stock of mutual funds;
iii) annuity contract;
iv) insurance pension product;
v) pre-need pension plan;
vi) share of stock or other security listed and traded in a local exchange;
vii) exchange-traded bond;
viii) government securities; and
ix) any other category of investment product or outlet allowed for PERA purposes.
Full text of the law is here: http://www.bsp.gov.ph/regulations/laws_pera.asp
You may use PERA to slowly build up additional funds which you may use upon retirement,
even if you are employed and are entitled to receive retirement benefits from your employer.
This is in addition to the retirement benefits you may receive under the law.
even if you are employed and are entitled to receive retirement benefits from your employer.
This is in addition to the retirement benefits you may receive under the law.
- Any gains of investments credited to a PERA account up to the limit of P100K/year are tax free.
Like 20% witholding tax on bank deposits are waived, capital gains tax waived, 10% tax on dividends waived, etc.
SEC. 9. Tax Treatment of Investment Income. --
All income earned from the investments and reinvestments of the maximum amount allowed herein is tax exempt.
All income earned from the investments and reinvestments of the maximum amount allowed herein is tax exempt.
- In addition, there is a 5% tax credit against any deposits into
the PERA account up to the limit of P100K/year.
This tax credit certificate, valid for 5 years, can be used as payment for any income tax.
- If employer decides to contribute to employee’s PERA account,
that contribution will be tax free, it will NOT be part of
the employee’s taxable benefits / de minimis (which currently has at least a 20% tax after threshold).
In addition, the employer can put that contribution in their valid expenses,
and it will be non-taxable also on the employer’s part.
- If you become hospitalized longer than 30 days or become disabled,
you can withdraw the amount earlier than 55 years old without penalties.
(Otherwise, early withdrawal is allowed but with minimal penalties
such as paying the tax credit and tax exemption). - If you die, the full amount in your PERA account will be
given tax free to your heirs / appointed beneficiary.
It cannot be touched by the government to pay for estate taxes / paid to creditors.
Banks offering it:
Currently, only BDO and BPI have PERA offerings.
For government bank, it is offered by Landbank.
BDO procedure is faster, it can be done 100% online if you use BDO online banking.
BPI requires communication with the head office to open an account,
but you can schedule a meeting at your nearest branch with the head office personnel.
Not everyone knows about it,
so better to email head office first (check BPI website).
For government bank, it is offered by Landbank.
BDO procedure is faster, it can be done 100% online if you use BDO online banking.
BPI requires communication with the head office to open an account,
but you can schedule a meeting at your nearest branch with the head office personnel.
Not everyone knows about it,
so better to email head office first (check BPI website).
BDO (minimum investment: P1K): money market, UITF, bond fund
BPI: money market, UITF, bond fund
Landbank: money market, UITF, bond fund. Global fund (dollar)
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