Higher caps on pera contribution eyed
The government is considering raising the annual contribution limits for Personal Equity and Retirement Account (Pera), allowing Filipinos to save more for retirement.
In a statement on Tuesday, the Department of Finance (DOF) said it was looking to establish a uniform annual contribution limit to simplify the rules and promote greater equity among contributors.
Created under Republic Act No. 9505, Pera is a voluntary retirement savings program designed to supplement state-run pension schemes and employer-sponsored retirement plans. Contributions are invested in eligible financial products in the Philippines.
Regular contributors can currently put in up to P200,000 a year, while overseas Filipino workers (OFWs) have a higher annual limit of P400,000.
The DOF said it would study possible adjustments to the existing limits to determine how higher contributions could help Filipinos build their retirement savings, taking into account changes in income levels, financial needs and prevailing economic conditions.
Data from the Bangko Sentral ng Pilipinas showed that Pera contributions rose 45 percent to P757.55 million in the first half of the year, from P521.36 million a year earlier.
Employees accounted for the largest share, contributing P449.45 million, followed by self-employed Filipinos with P207.9 million and OFWs with P100.2 million.
The increase in contributions coincided with a nearly fivefold jump in the number of Pera contributors to 30,055 from 6,193 a year earlier.
Pera is considered a superior retirement savings option mainly due to the benefits it offers to individual contributors, such as tax exemptions on investment income.
In case of death, the remaining Pera funds will be paid out to beneficiaries estate tax-free.
As part of the review, the DOF has invited stakeholders from the financial and investment sectors, employers, labor groups, retirement and pension institutions, and other relevant organizations to submit their inputs and recommendations on how to make Pera more accessible, beneficial and attractive to everyday savers.
“The review will also consider other policy and regulatory improvements that could address barriers to participation, strengthen awareness of the program, and enhance its overall effectiveness,” the department said.
