March 21, 2023

BSP doubles PERA contributions to boost retirement savings for Filipinos

The Bangko Sentral ng Pilipinas (BSP) has made a bold move by doubling the yearly contribution to the Personal Equity and Retirement Account (PERA).

According to BSP Governor Felipe M. Medalla, the increase aims to encourage more Filipinos to invest in their retirement through the PERA program.

The annual investment limits for locally employed and self-employed individuals have been raised from P100,000 to P200,000, while overseas Filipinos can now contribute up to P400,000.

This decision is in line with the government’s goal of mobilizing individual savings for capital market development and generating funds for long-term projects.

The BSP has also eliminated the basic security deposit for the faithful performance of a PERA administrator’s duties, which was previously set at 0.5 percent of the book value of PERA assets. This change is expected to lower the cost of administering PERA assets and reduce charges on PERA, encouraging more BSP-supervised financial institutions to participate in the PERA ecosystem.

After investing in PERA for at least five years and reaching 55 years old, contributors can redeem their PERA investment tax-free.

Additionally, PERA offers a five percent tax credit on the contribution that can be used to pay for national income tax liabilities and a tax-free distribution on qualified withdrawal of PERA investments.

As of end-2022, there were 5,100 PERA contributors, up 16 percent from 4,382 in 2021.

PERA contributions also increased by 30 percent last year to P329.55 million from P253.35 million in 2021. Of the total, about P223.71 million are investments by 3,600 employed individuals, while 785 self-employed individuals contributed P45.25 million, and 721 overseas Filipino workers invested P60.58 million.