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Bangko Sentral ng Pilipinas (BSP) will launch the Digital Personal Equity and Retirement Account (PERA) next week, which is one of its initiatives to promote digitization in the country’s financial system.
In a statement on Monday, the central bank announced that the virtual launch of Digital PERA will be led by BSP Governor Benjamin Diokno on September 8 through his Facebook page.
“The digital PERA will allow Filipinos to invest in PERA investment products anytime, anywhere using only their mobile phones and other devices. This is firmly in line with the BSP’s goal of fostering digitization in the financial system and bringing the BSP closer to the people, Diokno said.
PERA is a voluntary retirement account that can be a supplemental source of retirement benefits in addition to the state sponsored retirement programs implemented by the Social Security System or the Government Service Insurance System.
It is structured to encourage Filipinos to invest in long-term retirement savings products while enjoying certain tax incentives.
PERA was created by Republic Law 9505 that became law on August 22, 2008. Unlike existing national or corporate pension plans, PERA does not require a salary deduction to accumulate funds. Instead, it is based on an individual’s decision to invest up to P100,000 annually.
Filipino workers abroad receive the added benefit of being able to invest twice the normal limit or up to P200,000 per year. PERA also allows individuals to voluntarily open up to five accounts invested in specific PERA-accredited product lines.
A PERA account has the following incentives: 5 percent tax credit on actual PERA contribution; tax exemption from final withholding of 20 percent of interest on substitute bank deposits and trust funds; Final withholding tax of 10 percent on dividends; tax on capital gains from the sale of shares; and regular income tax on PERA products.
PERA’s assets cannot be considered assets for bad debt and wealth tax purposes.
According to Bangko Sentral, the digitization of PERA is considered to enable accredited banks and financial institutions to provide convenient and affordable retirement savings products.
The initiative, carried out by BSP in collaboration with the Philippine Trust Officials Association, is themed “Convenient and Affordable Retirement Savings Through Digital PERA” or “#PERACares”.
