PERA, at last!
Who else is happy that the Personal Equity Retirement Account (PERA) law will finally be implemented?!
In a nutshell, the PERA is a voluntary retirement system where contributions are made by both employees and employers, kind of like the 401k in the United States. You get a tax credit of 5% of your PERA contributions and it is tax-exempt if you make withdrawals at the age of 55 and up. Here's a nice primer for the PERA: http://business.inquirer.net/198300/all-about-pera
The PERA became law way back in 2008 and the BSP promised to roll it out in January 2015, but considering its complexity and the need to get all the agencies involved on board, as well as the BIR's resistance to the tax credit, the promised roll out kept on being rolled back. Until now that is.
I first got wind of the PERA in Boracay, of all places. The hotel we were staying in had a magazine which had an article on PERA and my eyes grew big at the thought of a retirement account to supplement the paltry pension I would receive from the SSS (I was still in a law firm then). I tore out the pages of the PERA article (peace!) and researched some more on it. Of course, you can imagine my disappointment when I saw that the BSP et al were still working on the Implementing Rules and Regulations (IRR) years after the law had been passed.
As far as I know, only BPI and BDO have signed up to become PERA administrators, but I won't be surprised if more BSP accredited entities will offer PERA administration as well (Hello! Big money is involved!). On a personal note, I'm crossing my fingers that Sun Life will be a PERA administrator too since I already have a mutual funds account there and it will be easier to designate it as a PERA account than opening a new one.
Exciting times ahead :)
*Updates:
Yay, finally! So excited to see this materialize at last.
ReplyDeleteGotta read more about PERA. All i know is it's much like the 401K in the US. I do hope the staff of banks would be knowledegable with this. Dati kasi when i enrolled sa UITF, parang mismong manager nung account, hindi nya mai-explain sa akin ng mabuti. ;)
ReplyDeleteSana may employer matching din! Wishful thinking ba yun?
ReplyDeleteNaku, sana maimplement na to soon, super excited na ako! It's about time magkaroon tayo ng ganyan at sana pwede rin i-max out yung contributions gaya ng 401k ng US. Para rin pala tong provident fund namin sa opis kaso yung sa opis namin, by the bracket ang employee contributions which is based sa income ng mga tao, di pwede i-max out.
ReplyDeleteMe too! Sa wakas talaga.
ReplyDeleteYeah, that really happens often. But I'm hoping that banks will be more proactive now and educate their own personnel. Or at least have designated desks to handle investment concerns.
ReplyDeleteFeel ko pwede siya. If this is really patterned after the 401k, baka may tax credits din yung employer for matching their employees' contributions. Tax credits na, pogi points pa.
ReplyDeleteIt's about time talaga!
ReplyDeleteAfter a long wait! I saw that both BPI and BDO already have PERA accredited funds since late December 2016. Theirs look patterned after their own equity funds. However, I'm still holding out for other entities/institutions who will roll out their own PERA accredited fund.
ReplyDeleteSame here. I'm hoping that more institutions will have their own PERA funds.
ReplyDeleteI'm not happy with the large management fees for BPI and BDO equity funds.