PERA, the first step to a wealthier retirement

FILIPINOS are hardworking people, always ready to log long hours of work for the benefit of their families. Seeing the parents, siblings and children enjoy the fruits of their labor is a source of happiness and pride. Typically, one would save up for a home, a car, children’s education and the celebrations of milestones in life. However, because of this selflessness, some often forget to take care of themselves, especially when it comes to retirement.

Oftentimes, you will hear some say “Retirement is still years away, I will just start saving for it in 10 years” or “I keep a bit in savings for my retirement, and my kids will take care of me when I retire.” Some solely depend on retirement benefits from government pension agencies or the corporate retirement pay mandated by law. Some, including millennials, do invest for their retirement albeit irregularly.

When it comes to retirement, people are usually short on discipline and planning, mainly because only a few think about retirement at an early age, only to face the reality of retirement without a retirement plan.

This is where the Personal Equity and Retirement Account or PERA comes in. PERA is a voluntary retirement savings plan that encourages individuals to save and plan for their retirement while enjoying tax incentives both from the amount contributed and the income from investments. Filipinos of legal age, earning income locally or from abroad, and with a Philippine Tax Identification Number (TIN), are eligible to open a PERA. An individual may invest up to P100,000, and for those living and working overseas, up to P200,000 per year.

As PERA Contributors, one will receive the following benefits through PERA: income earned is tax-exempt; annual contributions are eligible to a 5% tax credit, subject to issuance of Bureau of Internal Revenue regulation; upon reaching 55 years old and having made at least five years of contributions, PERA withdrawals are not subject to income tax; and, in the event of the untimely demise of the contributor, the PERA funds are not subject to estate taxes.

PERA, being a voluntary retirement plan, allows anyone to make all the investment decisions, giving them control over their retirement goals.

BDO Unibank is the first accredited PERA administrator in the country. It now offers PERA through its BDO Invest Online, so individuals can invest conveniently for a comfortable retirement.