PERA contributions hit P396 million in 2023

MANILA, Philippines — Voluntary retirement contributions rose by 20.3 percent to P396.309 million in 2023 from P329.548 million in 2022, driven by the increase in the number of participants, according to the Bangko Sentral ng Pilipinas.

Data from the BSP showed the number of contributors to the Personal Equity and Retirement Account (PERA) stood at 5,555 as of December 2023, 8.9 percent higher than the 5,100 a year ago.

Broken down, around 3,900 employed individuals contributed P273.252 million to the fund as of end-2023, followed by 775 overseas Filipino workers (OFWs) with P69.16 million and 856 self-employed individuals with P53.9 million.

“The pickup in overall contribution can be traced to the increase in the number of participants with investors opting to build up their buffers, wary of another economic downturn that could curtain both their cash flow and or savings,” ING Bank Manila senior economist Nicholas Mapa said.

Mapa said PERA contributions may continue to pick up in the coming months, as money supply is expected to recover both in the Philippines and abroad.

Created under Republic Act 9505, PERA is a voluntary retirement savings program that supplements state-based pension plans from the Social Security System and the Government Service Insurance System, as well as employer-sponsored retirement plans.

The BSP introduced PERA in 2016 with support from the financial industry.

Starting 2023, contributors aged 18 and above who are employed locally or self-employed are allowed to make a maximum annual investment of P200,000 in their PERA accounts, up from P100,000 previously.

Meanwhile, OFWs are allowed to invest up to P400,000 a year from P200,000 previously. Each individual can have a maximum of five PERA accounts.

The BSP also encourages Filipinos to take full advantage of the benefits offered under PERA, including the exemption of earnings from taxes on final withholding, capital gains and regular income.

PERA contributors are also entitled to a five percent tax credit on contributions for the year that can be used to pay national income tax liabilities.

Moreover, qualified PERA withdrawals are not subject to taxes.

When a contributor reaches 55 years old and an investment period of at least five years, he or she can redeem the PERA investment free of taxes.

The number of contributors rose sharply when Digital PERA was launched in September 2020.

Digital PERA is an online one-stop shop where investors can conveniently open an account, browse various PERA products, monitor their PERA accounts, and settle transactions via InstaPay and PESONet.

The digitalization of PERA also enabled Filipinos here and abroad to conveniently open an account, invest in different PERA products, and access their PERA investments using mobile devices at any time.