SEC releases guidelines on equity, retirement accounts

The Securities and Exchange Commission (SEC) on Tuesday said it has released the guidelines for the accreditation of financial market participants offering Personal Equity and Retirement Account (PERA) products.

In a statement, the SEC said it issued, last September 19, Memorandum Circular No. 14 series of 2024 which outlined the guidelines on the accreditation requirements of PERA Market Participants, under Republic Act No. 9505, or the PERA Act of 2008, and its implementing rules and regulations (IRR).

The PERA law provides tax benefits while instilling the discipline of saving money by making annual contributions.

Unlike existing national or corporate pension schemes, PERA does not require a deduction from one’s salary to accumulate funds.

The SEC said it recently issued guidelines to entities regulated by the SEC seeking to register as a PERA market participant, such as a PERA administrator or investment manager.

The corporate and capital markets regulator said that securities brokers, investment houses, and investment company advisers or fund managers may register as PERA administrators, while investment company advisers or fund managers may register as investment managers. 

“Other entities or individuals as may be determined by the Commission as having the qualifications to be accredited as administrator or investment manager may also apply,” it said.

The SEC said its regulated entities seeking to apply as PERA administrators or investment managers must apply for the issuance of qualification certificates with the SEC Markets and Securities Regulation Department.

“To qualify as a PERA administrator, the applicant must maintain a net worth of at least P100 million at all times; adopt and fully comply with a Manual of Corporate Governance; provide a clear and sufficient organizational plan or structure of its personnel who will perform PERA administration functions; and possess adequate systems and technological capabilities, as well as the necessary technical expertise and personnel to administer all types of PERA investment products,” it said.

“The applicant must also submit proof that it has sufficient personnel who have undergone the requisite training prescribed or approved by the Commission to educate PERA contributors on the nature of a PERA and the requirements, risks, and benefits of the investment product, among others,” it added.

Pursuant to the PERA IRR, the SEC said the guidelines also require registered PERA administrators to hold government securities equivalent to 1% of the book value of the total volume of PERA assets administered or such other amount as the regulator may impose, earmarked in favor of the commission. 

“This will serve as security for the faithful performance of its duties. The amount shall be in addition to and shall be treated separately from the capital, surplus, and undivided profits of the administrator,” it said.

“The Commission, however, has decided to temporarily reduce the amount of the security deposit to 0.0% of the book value of the total volume of PERA assets administered. This is to encourage market participants to apply as a PERA administrator,” it added.

Moreover, the SEC said regulated entities applying to be PERA investment managers must have written supervision and control procedures for the conduct of the investment management functions, with proof of at least five years’ experience in professional investment management.

“They must also provide certified true copies of educational, professional/technical, or other academic qualifications of its principal officers; Certification Requirement for Compliance Officer; copy of the form contract or agreement between the contributor and investment manager, and the schedule of commission charges and/or fees it will charge for its services,” it said.