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Manila Bulletin devider Business devider Banking & Finance devider PERA contributions total P396.3 M in 2023

PERA contributions total P396.3 M in 2023

Published Mar 1, 2024 09:05 am

Total contributions to the Personal Equity and Retirement Account (PERA) amounted to P396.309 million in 2023, up by 20.25 percent from P329.548 million in 2022, based on Bangko Sentral ng Pilipinas (BSP) data.

PERA, the government’s voluntary retirement savings program, had 5,555 contributors last year versus 5,100 in 2022.

Based on BSP numbers, employed individuals accounted for bulk of contributions with P273.252 million of the total, 22 percent higher compared to the previous year’s P223.714 million. Employee contributors also increased to 3,924 from 3,594 in 2022.

Overseas Filipinos or Overseas Filipino Workers (OFWs), meanwhile, contributed P69.158 million in 2023, up by 14.15 percent from P60.583 million in 2022. There were more OFWs contributors last year with 775 from 721 in 2022.

Self-employed individuals’ contributions, on the other hand, rose by 19.11 percent to P53.898 million in 2023 from P45.250 million in 2022. Last year, there were 856 self-employed contributors compared to 785 in the previous year.

The BSP said in a previous report that PERA has sustained its growth momentum since 2017 in terms of number of contributors and total contributions. In 2017, there were only 583 contributors with P37.146 million.

The BSP implemented PERA in 2016 under Republic Act No. 9505. As a voluntary retirement savings program, it supplements state-based pension plans and employer-sponsored retirement plans such as the Social Security System and the Government Service Insurance System.

The central bank’s efforts to promote PERA was mostly done by raising public awareness and making PERA more accessible through online platforms.

The BSP has always promoted PERA as a “superior retirement savings option” because of the tax benefits and tax exemptions on earnings from PERA investments. For example, it offers a five percent tax credit on the PERA contribution that can be used to pay for national income tax liabilities and a tax-free distribution on qualified withdrawal of PERA investments.

It also noted that improving economic conditions allowed PERA contributors to increase their allocation for their retirement savings. “In addition, the reduction in individual income taxes, which took effect in January 2023 as part of the Tax Reform for Acceleration and Inclusion, helped spur consumer spending, investments, and savings,” said the BSP.

In 2023, the BSP raised the annual limits of PERA contributions from P100,000 to P200,000 for locally employed and self-employed individuals, and from P200,000 to P400,000 for OFWs.

The BSP said continuous financial education, especially on savings and investments, further promoted PERA. The increase in the annual PERA contribution limit across all types of contributors and the removal of the basic security deposit for a PERA administrator also boost its growth.

To encourage more Filipinos and financial institutions to participate in the PERA ecosystem, the BSP has other plans in the pipeline such as: the expansion of the PERA ecosystem by allowing electronic money issuers to participate as administrators; and the development of comprehensive information materials to address common inquiries on the availment and utilization of tax credit certificates, thus promoting efficiency.

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