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Takewaways from the FMAP Convention: Updates and Prospects of PERA

by Mary Anne Jelli Gaza



Ms. Annaliza Guanco Tan-Cimafranca of the Bangko Sentral ng Pilipinas briefed attendees about the nature and benefits provided by the Personal Equity and Retirement Account (PERA) Act of 2008 (RA No. 9505), and its role as a new catalyst for the country’s asset management industry. The institution of PERA aims to promote savings and reduce the country’s dependence on social pension benefits. PERA provides tax incentives to the contributor in the form of a 5% income tax credit based on contributions, tax exemption for investment income, and tax free withdrawals subject to conditions. Maximum annual PERA contributions is at Php100,000 per individual while OFWs are allowed to contribute at a higher limit of up to Php200,000. Allowed investment products for PERA include unit investment trust funds (UITFs), mutual funds, and insurance pension products, among others.

The asset management industry can benefit from the full implementation of the PERA law by serving as the accounts’ administrator, which is tasked to oversee the account, implement contributors’ investment instructions, value investments, and maintain records. The Bank of the Philippine Islands Asset Management and Trust Group is the country’s first accredited PERA administrator. Financial intermediaries can also serve as investment manager, cash custodian, securities custodian or product provider for PERA. Before this month’s close, the Bureau of Internal Revenue will release a revenue memorandum order to clarify tax rules on PERA. After the finalization of tax implementing rules and inter-regulatory memorandum agreements, investors may then tap into the benefits and incentives provided by the PERA Act, and ultimately spur further activity in the capital markets.

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