MANILA, Philippines — A program on voluntary retirement account comprised of personal savings and investments launched more than three years ago is going digital, according to the Bangko Sentral ng Pilipinas (BSP).
BSP Governor Benjamin Diokno said the digital version of the Personal Equity and Retirement Account (PERA) would be launched on Sept. 8 as part of the thrust to foster digitalization in the financial system and to bring the central bank closer to the people.
“The digital PERA will allow Filipinos to invest in PERA investment products anytime, anywhere using only their mobile phones and other devices,” Diokno said.
Its digitalization is seen to enable PERA-accredited banks and financial institutions to provide convenient and affordable retirement saving products.
The theme of the initiative of BSP, in collaboration with the Trust Officer Association of the Philippines (TOAP), is “Convenient and Affordable Retirement Savings through Digital PERA or #PERACares.”
The voluntary retirement account, under Republic Act 9505 or the PERA Act of 2008, provides an organizing framework to help Filipinos 18 years old and above prepare for their eventual retirement, was launched by the BSP in December 2016.
It provides Filipinos a tax-exempt facility to supplement their future pension benefits from the Social Security System (SSS), the Government Service Insurance System (GSIS), and from their own employers.
Unlike existing national or corporate pension schemes, PERA does not require a deduction from one’s salary to accumulate funds, but relies on an individual’s decision to invest up to P100,000 annually to prepare for retirement.
Overseas Filipino workers (OFWs) were provided the additional benefit of being able to invest up to P200,000 annually or twice the normal limit.
The program is structured to encourage Filipinos to invest in long-term retirement saving products while enjoying certain tax incentives, including a five percent income tax credit on the actual PERA contribution that could be used to pay income tax liabilities, as well as tax exemption from the 20 percent final withholding tax from interest on bank deposits, deposit substitutes and trust funds.
Other incentives include a 10 percent final withholding tax on dividends, capital gains tax on disposition of shares of stock, and regular income tax on PERA products.
Current PERA administrators include BDO Unibank Inc and BPI Asset Management and Trust Corp., while state-run Land Bank of the Philippines acts as custodian.
Several banks, including BDO, BPI AMTC, Landbank, Metropolitan Bank & Trust Co. (Metrobank), and Rizal Commercial Banking Corp. (RCBC), serve as PERA investment product providers.
The efforts of the BSP to transform the Philippines into a cash-lite from a cash-heavy economy accelerated as consumers shifted to digital transactions amid the novel coronavirus disease 2019 pandemic.
Diokno has committed to raise the share of electronic payments to 50 percent of total transactions by the middle of 2023.
The result of the survey conducted by Better Than Cash Alliance (BTCA) showed the share of digital transactions increased to 20 percent in 2018 from eight percent in 2013 in terms of value, and to 10 percent from one percent in terms of value since the National Retail Payments System (NRPS) was launched in December 2015.