Pace of contribution to savings pool slowed
THE level of contributions to the Personal Equity and Retirement Account (PERA) posted its slowest increase in the past five years, according to the Bangko Sentral ng Pilipinas (BSP). The number of contributions to
the voluntary savings program increased by only 16 percent to 5,100 in 2022 from 4,382 in 2021. This is the slowest increase since the central bank started collecting PERA data in 2017.
The fastest growth in the number of contributions to PERA, a pool that aims to supplement retirement funds, was recorded in 2020 when there was a 92.435 percent increase in contributions to 2,671 from 1,388 in 2019.
“It (PERA) is considered a superior retirement savings option mainly due to the tax benefits it offers to individual contributors, such as tax exemptions on earnings from PERA investments; a five percent tax credit on the PERA contribution that can be used to pay for national income tax liabilities; and a tax-free distribution on qualified withdrawal of PERA investments,” the BSP explained.
In 2022, the bulk of the PER A contributors or 3,594 were employees while 785 were self-employed and 721 were overseas Filipino workers (OFWS).
The BSP said, however, that PER A contributions reached P329.55 million at end-2022, a 30-percent increase from the P253.35 million recorded a year earlier.
The employed individuals contributed P223.71 million to the fund as of end-2022, followed by OFWS and self-employed individuals who invested P60.58 million and P45.25 million, respectively.
The BSP launched PERA in 2016 under Republic Act 9505. In enddecember 2017, PERA funds were recorded at P37.15 million with 583 contributors.
A potential contributor only needs a Tax Identification Number to invest in the PERA. By the time the contributor reaches the age of 55 and an investment period of at least five years, he or she can redeem the PERA investment free of taxes.
The BSP started the end-to-end digitalization of the PERA environment in September 2020. As an online marketplace, the digital PERA facilitates greater convenience and efficiency by enabling Filipinos to open PERA accounts, choose among different accredited PERA products, and settle PERA transactions electronically using mobile phones or other digital devices.