MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) expects to implement the Personal Equity and Retirement Account (PERA) Law next year after various government agencies signed its implementing rules and regulations yesterday.
BSP Governor Amando M. Tetangco Jr. spearheaded the signing of the memorandum of agreement (MOA) and the IRR of Republic Act 9505 otherwise known as the PERA Act of 2008.
Other signatories include Securities and Exchange Commission (SEC) chairperson Fe Barin, Insurance Commission chief Eduardo Malinis, Finance Undersecretary Jeremias Paul Jr., and Internal Revenue Deputy Commissioner Nelson Aspe.
BSP Deputy Governor Nestor Espenilla Jr. told reporters that the signing of the IRR would finally pave the way for the implementation of the law that was conceptualized almost 10 years ago.
“We are hopeful that by next year this will be off the ground,” Espenilla stressed.
He pointed out that the PERA Law would create a savings investment vehicle of at least five years especially for those who are not covered by the Social Security System (SSS) and the Government Service Insurance System (GSIS) as well as Filipinos working abroad.
He added that the law would also develop the domestic capital market by giving incentives to long-term investments and creating more institutional investors.
Espenilla said a contributor could establish an account with a maximum annual contribution of P100,000 while overseas Filipino workers (OFWs) could inject P200,000 per year who would be entitled to a tax credit of five percent.
The contributions of participants would be managed by administrators to be regulated by various government agencies. Each administrator who will manage the trust fund should maintain a net worth of at least P100 million to ensure that it has sufficient capital.
The contributions of participants of the PERA Law could be invested in investment trust fund, share of stock of mutual fund, annuity contract, insurance pension product, pre-need pension plan, shares of stock listed and traded at the local stock exchange, exchange-traded bond, and other investment products.
Espenilla said the law would encourage contributors to invest their extra savings into the fund.
He pointed out that total deposit in the banking system currently stands at P5 trillion.
Meanwhile, Barin said the SEC has appealed to legislators to approve as part of the 2010 budget the P75 million government counter-part funding for the establishment of the credit bureau.
Barin said inclusion of the said fund in next year’s budget would enable the government to implement RA 9510 that established the Central Credit Information Corp. (CCIC).
“It (CCIC) can be implemented on or before the start of next year,” she told reporters. The government’s equity share is worth P75 million while that of the private sector amounts to P50 million.
The law allows for the gathering of credit information from financial institutions in a bid to check data of borrowers aimed at ensuring a vibrant credit market in the country.