SEC lists possible PERA investment products

The Securities and Exchange Commission (SEC) is coming up with a list of equities, bonds, funds and other securities in which Personal Equity and Retirement Account (PERA) funds may be invested.

This is meant to guide investors looking for options to park their funds instead of falling for get-rich-quick schemes such as those offered mostly by investment scams.

The SEC has released for public comment the draft of the proposed Rules on Qualified and/or Eligible PERA investment products, pursuant to Republic Act 9505, or the PERA Act of 2008, and its Implementing Rules and Regulations.

According to the proposed rules, eligible funds are newly formed mutual funds, including any sub-fund of an umbrella fund and exchange traded funds whose fund managers have a track record of at least five years, and whose names contain the words “Personal Equity and Retirement Account” or “PERA.”

PERA funds may also be invested in real estate investment trust shares; corporate bonds with an investible rating issued by an accredited credit rating agency; and equity securities that form part of the Philippine Stock Exchange index (PSEi).

Government securities, securities issued by the Bangko Sentral ng Pilipinas and corporate bonds issued by banks in compliance with BSP requirements will also be considered eligible PERA investment products.

Under the proposed rules, securities that are registered pursuant to the requirements of Republic Act 8799 or the Securities Regulation Code, and Republic Act 2629 or the Investment Company Act are deemed to be eligible PERA investment products.

“The SEC may qualify other securities to be eligible as PERA investment products if the product is non-speculative, readily marketable, and has a track record of regular income payment to investors,” the SEC said.

On the other hand, a security loses its eligibility as a PERA investment product when the SEC declares it to be ineligible.

A registered equity security may also lose its eligibility if its registration statement gets suspended or revoked, or in the case of a PSEi member security, if it is removed from the index.

Corporate bonds issued by banks are not eligible if these are declared to be in default and if their credit rating is downgraded to a non-investible grade.

As additional safeguards, the rules will also require issuers of securities that have been qualified by the SEC to be eligible PERA investment products to comply with reportorial requirements set by the Commission.

“Failure to abide by the guidelines and other laws, rules, and relevant regulations will result in administrative penalties, and other civil and criminal liability provided for under applicable laws,” the SEC said.