PERA infrastructure in the works, to ‘take time’

THE personal equity and retirement account (PERA) may take some time to put into place, according to the country’s first PERA administrator, as work to finalize the investment product’s framework is still in progress.

“We’re working on the infrastructure to put the product in place so it will be a while because it will take time but it’s moving in the right direction... we’re working on it now,” Nestor V. Tan, president and chief executive officer of BDO Unibank, Inc., told reporters in a recent interview when asked for an update on the investment product’s progress.

Last September, the Sy- led bank’s BDO Trust and Investment Group said it has become the country’s first institution to be accredited by the Bangko Sentral ng Pilipinas ( BSP) and Bureau of Internal Revenue (BIR) as a PERA administrator.

The Sy-led bank has said that it “will allow BDO to further promote its advocacy for financial inclusion.”

Asked if the bank has a timeline for the new investment product, Mr. Tan said, “I don’t know yet how long it will take.”

The PERA Law or Republic Act 9505 was passed in 2008 that eyed to encourage Filipinos to save up for retirement by serving as a new investment product.

Under the law, an individual can contribute up to a maximum of P100,000 annually under the platform while up to as much as P200,000 for overseas Filipino workers.

A qualified PERA contributor may place their money in five PERA accounts at once across five recognized investment products, such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities, for the money to grow. A 5% tax credit can be deducted in the contributor’s annual tax liabilities.

The contributor may claim his or her proceeds once the individual reaches the age of 55 on a periodic or lump sum basis or has contributed to the investment product for at least five years. The money will be on top of pensions that will be paid by staterun Social Security System or the Government Service Insurance System.

BSP Deputy Governor Nestor A. Espenilla, Jr. had said that the central bank will target a soft launch for PERA this month, eyeing to formally launch the product by yearend.

In August, the BIR, under BIR Revenue Memorandum Order 422016, had outlined rules that detailed the reporting requirements covering the new investment tool. According to the law, accredited administrators are mandated to report contributions, computing investment values and collecting taxes covered by the fund.

BDO saw its bottom line reach P19.3 billion in the first nine months of the year, up 10% from P17.6 billion a year ago.

Shares in the bank gained 20 centavos or 0.18% to close at P110.70 apiece on Friday.