Plan for retirement NOW! (PERA FAQs)

You don’t have to be retired or nearing retirement to plan for comfort in old age.  Whether you’re 18 or 68, NOW is the time to secure your retirement years.  Consider PERA.

The Personal Equity and Retirement Account (PERA) is one of a few investment choices available for Filipinos  who want to save up for when they retire.  PERA is the Philippine Government’s program for supplementing, rather than replacing, pension benefits forthcoming from the Government Service Insurance System or GSIS (for government workers) and the Social Security System (SSS) for private-sector employees.

Filipinos, whether based here or abroad, aged 18 or above, and with a Tax Identification Number (TIN) may open a PERA account.

This article will provide basic information for those interested to join the program.

Who are qualified to open a PERA account?

Must be  at least 18 years old

Must have: a source of income in the country or abroad; a Tax Identification Number (TIN); a savings or current account with a PERA-administrator bank;  valid IDs (driver’s license, passport, UMID. SSS ID, etc.); copy of latest income tax.

How much investment is required?

Each investor in the Philippines may contribute up to PhP 100,000 every year.  Overseas Filipino workers (OFWs) may invest up to 200,000.

Investments may be more than the ceiling amounts indicated, but any excess amount is not eligible for tax exemption.

How are  PERA contributions invested?

PERA funds may be invested in:  Unit investment trust funds; mutual funds; government securities; annuity contracts; exchange-traded bonds; insurance pension products; pre-need pension plans; shares of stocks traded in the Philippine Stock Exchange; and other investment products authorized for PERA. .purposes.

How much earnings may be expected from a PERA investment?

The  amount of earnings  depends on the choice of investments. Different products yield different returns.

Can investments be withdrawn?

An investor can withdraw their tax-exempt PERA contributions when they have met the “55 and 5 rule,” that is, having reached 55 years of age and have contributed for at least five years. The amount can be remitted to either in lump sum or monthly pensions for a lifetime or for a certain period.

PERA investments can also b e withdrawn when the investor is sick for more than 30 days, was permanently disabled, or has passed away.

What are the advantages of investing in PERA?

Compared to regular savings accounts and time deposits, PERA yields higher investment returns because it is entitled to tax exemptions on investment income and allows investors to choose investment products  that fit their needs and disposition to risk. 

PERA investors enjoy the following tax advantages: income tax credit ; tax-free investment income; exemption from real estate tax.

What are the disadvantages of PERA investment?

Like other investment types, PERA comes with certain risks, depending on the chosen investment products.  For example, investment in a PERA equity fund exposes the investor to fluctuating stock prices and other common risks of stock investment.

The investor pays penalty charges for early withdrawals.

Investment in PERA entails administrator fee and other service fees.

(All these advantages and disadvantages will be explained to an investor  when he or she opens a PERA account.)

How to start investing in PERA

To start a PERA investment, one needs to open a PERA  account through an administrator bank.  Todate, there are four such banks:  Banco de Oro (BDO); Bank of the Philippine Islands (BPI); Land Bank of the Philippines (Landbank) and Metropolitan Bank (Metrobank). As soon as the account is opened,  the investor  can start making contributions through the chosen administrator or over-the-counter cash or check payments.

(Note: Contact the bank first to ask which granches you can go to open an account. Make sure you have the document requirements earlier mentioned in this article.)

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