More banks interested in BSP's PERA retirement savings program

Several banks are now eyeing the Personal Equity and Retirement Account (PERA) program spearheaded by the Bangko Sentral ng Pilipinas (BSP).

Aside from current administrators BDO Unibank Inc. and Bank of the Philippine Islands (BPI), and custodian Land Bank of the Philippines (LandBank), several lenders have relayed their interest in PERA, the BSP said.

“To date, aside from these three banks, there are no banks which have applied to become PERA administrators or custodians," BSP Deputy Governor Diwa C. Guinigundo said in a text message to GMA News Online.

"There are, however, expressions of interests, but these have yet to be initiated by a formal application,” the BSP official noted but declined to identify the banks.

"We are considering to be a PERA Fund Provider," Concep Cruz, senior vice president and head of Asset Management Group at SBC, told GMA News Online.

Launched in December 2016, eight years after the PERA Law or Republic Act 9505 was passed in 2008, the idea behind the program is to encourage Filipinos to save up for their retirement.

Voluntary

The program complements the mandatory contributions of employees who are members of the pension funds Social Security System (SSS) and Government Service Insurance System (GSIS).

PERA is, however, voluntary unlike the automatic salary deductions for government employees under the GSIS and private sector employees under the SSS.

Individuals may contribute up to a maximum of P100,000 a year or P8,333.33 a month, while overseas Filipino workers (OFWs) are given a leeway of as much as P200,000 or P16,666.66 a month.

PERA constitutes five types of accounts across five recognized products such as trust funds, mutual funds, insurance, pre-need and government and listed bonds. An accountholder gets a 5 percent tax credit deducted from his or her annual tax liabilities.

They are also exempted from the following taxes:

• Final withholding tax on interest from any currency bank deposit, yield or any other monetary benefit from deposit substitutes and from trust funds, including depository bank under the expanded foreign currency deposit system

• Capital gains tax on the sale, exchange, retirement or maturity of bonds, debentures or other certificates of indebtedness

• 10 percent tax on cash and property, actually or constructively received from a domestic corporation, including a mutual fund company

• Capital gains tax on the sale, barter, exchange or other disposition of shares of stock in a domestic corporation

• Regular income tax

The account may be claimed once the individual celebrates 55 years of age, or if he or she has made contributions for at least five years. This is tax-free up to the P100,000 cap, and may be reinvested unless withdrawn ahead of actual retirement.

Financial advisers

As PERA administrator banks, BDO and BPI also serves the accountholders as financial advisers.

“They are responsible for administering and overseeing the PERA of the contributor,” Guinigundo said.

“They give the options on what investments are available, depending on the contributor’s risk profile, and then provide regular updates on the status of the PERA,” he added.

LandBank, as custodian bank, takes custody of the client's assets throughout the entire life of the PERA account.

“They take custody of the PERA assets. Contributors select which custodian bank should their assets be placed in,” Guinigundo said.

Another bank, however, has no immediate plan of serving as PERA administrator or custodian bank.

"Not for the meantime," Alexander C. Escucha, senior vice president and Investor and Corporate Relations Group head said.

"We have other strategic priorities that we need to execute," he added. — VDS, GMA News