SENATOR Juan Edgardo Angara has urged the Filipinos working abroad to save money for their retirement by investing their earnings in a Personal Equity Retirement Account or PERA, the country’s first-ever voluntary retirement account with tax incentives.
He said the Filipinos who leave their families and work abroad to give them a good life are making a big sacrifice.
“This is why we encourage our [workers] to save and invest their earnings here in the country so they can secure a comfortable retirement and be with their families,” said Angara, one of the authors of the PERA Law or Republic Act 9505.
PERA is a voluntary and personal account specifically for retirement, in which they can invest up to P200,000 annually. Non-workers may only make a maximum contribution of P100,000 annually.
Even if the worker is abroad, his or her spouse and children may open a PERA account in his or her behalf.
“PERA is a big help in ensuring that our workers abroad have money once they return to the Philippines,” Angara said.
Once a Filipino worker abroad reaches the retirement age of 55, all payments or distributions will be tax-exempt. This can be either in lump sum, a pension for a definite period or for a lifetime.
Early withdrawals are allowed, if the worker has made contributions for at least five years, but it will be subject to a penalty―except in cases when the individual is totally disabled due to an accident or hospitalization.
“PERA investments have higher returns because it is a tax-free investment income,” Angara said.
“PERA supplements the social pension Filipinos can get from the SSS or GSIS. It especially targets [the Filipinos working abroad] who may not be contributing to either of these funds.”
A national survey on financial inclusion conducted by the central bank showed that only 11 percent of Filipinos save for retirement or old age.
Angara said PERA will help and encourage Filipinos to save for their sunset years or for emergency medical situations.
The central bank has accredited Banco de Oro and Bank of the Philippine Islands as PERA institutional administrators.
PERA investment products include unit investment trust funds, shares of stock of mutual funds, insurance pension products, government securities and other financial products.