According to the Bangko Sentral ng Pilipinas (BSP), Filipinos here and abroad can now invest more funds each year for retirement through the Personal Equity and Retirement Account (Pera).
On Monday, the BSP said it had approved an increase in Pera’s annual contributions for salaried and self-employed Filipinos, as well as Foreign Filipino Workers (OFWs).
Filipinos working here can now invest up to 200,000 pesos per year from the 100,000 pesos originally allowed by the BSP. Meanwhile, OFWs can invest up to 400,000 pesos per year from the initial 200,000 pesos per year.
“The increase in limits provides our kababayans with [compatriots] with great opportunities to ensure their financial security. He also supports the government’s broader focus on mobilizing individual savings to develop the capital market and create funds for long-term projects,” BSP Gov. Felipe M. Medalla said in a statement.
In addition to increasing Pera’s contribution limits, BSP has also eliminated Pera’s basic good faith administrator security deposit, which was previously set at 0.5 percent of Pera’s book value of assets.
The move is expected to reduce the cost of managing Pera’s assets, which could impact savers due to Pera’s lower fees.
BSP sees this as a means to encourage more BSP controlled financial institutions to participate in the PERA ecosystem.
Pursuant to Republic Act 9505 (Pera Act of 2008), Secretary of the Treasury Benjamin E. Diocno approved an increase in Pera’s authorized annual contributions effective immediately beginning in 2023, upon the recommendation of the PERA Interagency Council.
The board includes Bangko Sentral ng Pilipinas (BSP) as the lead agency, the Securities and Exchange Commission, the Insurance Commission and the Internal Revenue Service.
Launched by BSP in 2016, Pera is a voluntary retirement savings program that complements government and employer-sponsored pension plans.
Last month, BSP reported that Pera’s contribution rate growth was the slowest in five years.
The number of contributions to the Voluntary Savings Program increased by just 16 percent to 5,100 in 2022 from 4,382 in 2021. This is the slowest increase since the central bank began collecting Pera data in 2017.
The fastest growth in the number of contributions to Pera, a pool dedicated to replenishing pension funds, was recorded in 2020, when contributions increased by 92,435% to 2,671 from 1,388 in 2019.
Last year, the bulk of Pera’s participants, or 3,594, were employees, while 785 were self-employed and 721 were OFWs.
However, BSP said that Pera’s contributions reached 329.55 million pesos at the end of 2022, up 30% from the 253.35 million pesos recorded a year earlier.