PERA

Personal Equity and Retirement Account (PERA)

The Personal Equity and Retirement Account (PERA) is a voluntary savings and investment program designed to help Filipinos build a nest egg for their retirement. Think of it like a special piggy bank where your money grows through smart investments, and the government gives you perks like tax breaks to make saving easier. Launched in 2008, PERA supplements other retirement plans such as those from the Social Security System (SSS), Government Service Insurance System (GSIS), or your employer's pension. It's especially useful for everyday workers—like a jeepney driver or an office clerk—who want to secure their future without feeling overwhelmed by complicated finance terms.

Unlike regular savings accounts, PERA encourages long-term investing in things like stocks or bonds, but with safeguards to keep your money safe. As of November 2025, recent updates have made it more accessible, especially for overseas Filipino workers (OFWs) and even employers chipping in.

History and Legal Basis

PERA was established under Republic Act No. 9505, the PERA Act of 2008, to boost personal savings and develop the Philippine capital markets. The law aims to reduce reliance on government pensions by promoting private retirement funds. It's overseen by multiple agencies: the Bangko Sentral ng Pilipinas (BSP) for banks and trust funds, the Securities and Exchange Commission (SEC) for investments like stocks and mutual funds, and the Insurance Commission (IC) for insurance-based products.

Over the years, PERA has evolved. Contribution limits, originally set at ₱100,000 per year, were adjusted upward based on inflation and economic needs—now at ₱200,000 for residents and ₱400,000 for OFWs. In 2025, key changes include:

• Republic Act No. 12214 (Capital Markets Efficiency Promotion Act or CMEPA): Signed into law earlier this year, it gives employers an extra 50% tax deduction on their PERA contributions if they match or exceed the employee's amount. This encourages companies to help workers save more.
• BSP Circular (October 2025): PERA Unit Investment Trust Funds (UITFs) are now exempt from the 10% non-resident ownership cap, making it easier for OFWs to invest in BSP securities without restrictions.
• BIR Revenue Regulations No. 22-2025: Starting July 1, 2025, employer contributions to PERA qualify for tax deductions, building on the CMEPA incentives.

These updates reflect a push toward "open finance," with a BSP pilot in August 2025 testing digital tools to simplify account opening.

Who Can Open a PERA?

Almost anyone can join—it's open to:

• Filipino citizens aged 18 or older with a valid TIN.
• Overseas Filipinos (OFWs), including those who reacquired citizenship under RA 9225, plus their spouses and minor children.
• Even non-Filipinos working in the Philippines, as long as they have a TIN.

You can open up to five PERA accounts at once, but they must all use the same administrator (like a bank). No need to be rich; even small monthly contributions count toward the five-year minimum for full benefits.

How PERA Works: Contributions and Investments

Contributions

You (or your employer) deposit money into your PERA, which gets invested. Limits as of 2025:

Contribution Limits

Category	Annual Limit	Monthly Equivalent (Approx.)	Tax Credit (5%)
Resident Filipinos	₱200,000	₱16,667	Up to ₱10,000
OFWs	₱400,000	₱33,333	Up to ₱20,000

• Contributions can be in pesos or foreign currency (converted at the current rate).
• Employers can add up to the same limit, treated as a deductible business expense.
• Excess contributions beyond the limit don't get tax perks but can still be invested.

You decide how to invest, or appoint a manager. Funds must stay in "PERA-qualified products"—safe, non-speculative options approved by regulators.

Investment Options

PERA money goes into diversified products to grow steadily, like planting a mango tree that bears fruit over time. Common choices include:

• Unit Investment Trust Funds (UITFs): Pooled funds managed by banks, investing in bonds or stocks (low to medium risk).
• Mutual Funds: Similar to UITFs but run by investment companies; great for beginners.
• Annuities or Insurance Pensions: From insurance firms, providing steady payouts like a lifetime allowance.
• Stocks and Bonds: Listed on the Philippine Stock Exchange (PSE), but only through approved channels.
• Pre-Need Plans: For education or health, if they qualify as retirement-focused.

Your account is held separately by a custodian (e.g., a bank), so it's protected even if the provider faces issues. Expect moderate growth—historical returns on conservative PERA funds average 4-7% annually, beating regular savings rates of 1-2%.

Tax Benefits: The Government's Sweetener

PERA's biggest draw? Tax perks that make saving feel like a bargain at Divisoria:

• 5% Tax Credit: Get a credit certificate worth 5% of your contributions (e.g., ₱10,000 on ₱200,000), which you can use against income taxes. No refunds if it exceeds your tax bill.
• Tax-Free Growth: Earnings from investments (dividends, interest) are 100% exempt.
• Tax-Free Withdrawals: After age 55 and five years of contributions, payouts are tax-free—lump sum or monthly pension.
• Employer Boost (New in 2025): Companies get an extra 50% deduction on matching contributions, potentially lowering your taxes indirectly.

These incentives could save you thousands, but you must report contributions to the BIR annually.

Withdrawals and Penalties

PERA is meant for the long haul—early dips come with a catch:

• Qualified Withdrawals: At 55+ with five years of contributions, or upon death (full payout to heirs). Options: lump sum, fixed-period pension, or lifetime annuity.
• Early Withdrawals: Before 55 or five years, you'll pay a penalty (at least equal to the tax perks enjoyed) plus regular income tax on gains. Exceptions: Medical emergencies (hospital stays over 30 days) or permanent disability—no penalty.
• No loans against your PERA; funds can't be used as collateral.

If you switch providers, roll over the full amount penalty-free.

Providers and How to Get Started

Accredited administrators include major banks (BPI, BDO), investment firms (like COL Financial), and insurers (Prulife, Sun Life). Check the BSP or SEC list for the latest.

Steps to Open:

1. Gather ID, TIN, and proof of income.
2. Visit a provider or use their app (digital opening via BSP's open finance pilot).
3. Fill out the PERA application—takes 15-30 minutes.
4. Start contributing via bank transfer or payroll deduction.
5. Track via statements; aim for auto-debits to build the habit.

Fees are low (0.5-2% annually), regulated to stay fair.

Benefits and Risks

Pros:

• Builds retirement security—imagine supplementing your SSS with extra ₱500,000+ by 60.
• Flexible for OFWs; recent rules make global access smoother.
• Promotes financial literacy; providers must educate you.

Cons:

• Locked-in nature: Early needs might force penalties.
• Market risks: Investments can dip (e.g., stock crashes), though diversified options minimize this.
• Low awareness: Only about 100,000 accounts exist, per 2024 estimates—far below potential.

PERA vs. Regular Savings

PERA vs. Regular Savings	PERA	Regular Savings
Annual Growth Potential	4-8% (investments)	1-2% (interest)
Tax on Earnings	Exempt	Taxed (20%)
Withdrawal Flexibility	Restricted	Anytime
Best For	Long-term retirement	Emergency fund

Recent Developments and Future Outlook

2025 has been a banner year for PERA adoption, with BSP's open finance pilot aiming to onboard 50,000 new users digitally. Experts predict growth as inflation (around 3-4%) erodes savings, pushing more toward investments. For OFWs remitting billions home yearly, PERA offers a tax-smart way to invest in the Philippines.

In summary, PERA isn't a get-rich-quick scheme but a steady path to a worry-free sunset years—like saving for that bahay kubo by the beach. Consult a financial advisor to see if it fits your plano, and remember: Starting small today beats regretting tomorrow. For official forms, visit bsp.gov.ph or bir.gov.ph.