In English, we’ll have PERA soon!
Signed in 2008, the Personal Equity and Retirement Account (PERA) inched closer to implementation as BIR issued a go-signal via a Revenue Memorandum Order. Next milestone will be for custodians and administrators of the funds to apply to BSP and get approved to offer PERA (they should be different entities, groups who take care and grow the PERA accounts of interested Pinoys). As of this writing, BSP confirmed that they have already approved 2 PERA administrators.
Not privy to the qualifications needed to be a custodian or administrator, but I’m guessing banks and fund managers will most likely qualify. We also recommend PERA to every Juan out there seeking to boost their retirement funds, on top of the usual SSS or GSIS (which we know is not enough as it is).
Though voluntary, those who opt in will see an additional deduction from Juan’s monthly income, but the good thing is that it goes to long term savings, instead of to expenses. Plus, employers may match the employee’s contributions, per the signed law. Whether employers are required to match their employees’ contributions, that remains to be clarified.
This can be a good passive investment for every Juan, where you just get deducted a fixed amount, which is technically saved and invested. Then forget about it for the meantime.
Almost like an Easy Investment Plan but more diversified. Good complementary investment for beginners who are still trying to invest on their own and be more familiar with bonds and stocks, fixed income securities etc. Plus you get extra guidance from the custodians and administrators.
Another advantage is the tax credit, such that by year end, Juan’s tax dues will be reduced 5% of his annual contribution, so that’s additional savings right there.
Contributors will start enjoying the fruits of their PERA account once they reach the age of 55. Early withdrawal is also provided for by the law, but there are penalties for such, which we suppose will also be ironed out upon actual launch.
Hopefully before the year ends, we get more clarity on when we can actually start building and multiplying our PERA.
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