What Is PERA, the Voluntary Retirement Savings Program of the Bangko Sentral?

(SPOT.ph) Record inflation and the pandemic have prompted Filipinos to rethink their finances with many looking for ways to save and grow their hard-earned money.

One of the ways to make your money work for you is through the PERA investment that can help provide financial security in your retirement. It's designed to supplement your GSIS and SSS benefits.

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Here is what you need to know about PERA, the voluntary retirement savings program for Filipinos:

What is PERA?

PERA or Personal Equity and Retirement Account, is a voluntary retirement savings program that supplements existing benefits from Social Security System, Government Service Insurance System, and employers, according to the Bangko Sentral ng Pilipinas.

Who is eligible to open a PERA account?

According to the BSP, Filipinos aged 18 and above, including those overseas, with a Tax Identification Number (TIN), whether employed or self-employed, may open a PERA account. 

What are the advantages of PERA?

Here are the listed advantages of the BSP:

• 5% income tax credit on the actual PERA contribution. The tax credit can be used to pay your income tax liabilities.
• For overseas Filipinos, the 5% tax credit can be claimed against any internal revenue tax liabilities in the Philippines.
• All income earned from the investments and reinvestments of the maximum amount allowed is exempted from taxes on investment income.
• PERA assets shall not be considered your assets for purpose of insolvency and estate taxes.

How much can I invest in PERA?

A PERA investor can contribute up to P100,000 each year. OFWs however can invest P200,000 yearly.

For married individuals, each spouse can contribute up to P100,000 each.

What are the investment products for PERA?

• Unit investment trust funds (UITFs)
• Mutual funds
• Annuity contracts
• Insurance pension products
• Pre-need pension plans
• Shares of stocks listed and traded in a local exchange
• Government securities
• Exchange-traded bonds
• Any other category of investment products allowed for PERA purposes

How do I invest in PERA?

To start investing, you need to open a PERA account through an administrator.

The following are the accredited PERA administrators by the BSP:

• ATRAM
• BDO
• BPI

Once you’ve chosen an administrator, inquire directly with the bank about the PERA account opening requirements. During the application process, you will be asked to fill out an application form, a Client Suitability Assessment, and asked to submit other documents.

You may also invest in PERA online through Seedbox.ph for as low as P 1,000.

When can I withdraw my PERA investment?

According to the BSP, you can withdraw your PERA contributions when you've reached the age of 55 and have contributed for at least five years. Payments may be made either in lump sum or monthly pensions for a lifetime or a certain period.

PERA investments can also be withdrawn without any penalties when the investor is sick for more than 30 days, was permanently disabled, or has died.

Those who want to withdraw their PERA investment before the age of 55, they may do so but are subject to withdrawal penalties. 

How much will I earn from my PERA investment?

Earnings for a PERA investment will vary depending on the choice of investment products. Since different investment products have different returns, the possibility of earning more will depend on the performance of your chosen investment product.