PERA Finally our Retirement Account for the Filipino

I’ve long been awaited a retirement fund akin to the IRA or 401(k) in the United States. Even Malaysia has the Finally, the Personal Equity and Retirement Account (PERA) Law has been approved by GMA and now awaiting IRR.

Championed by Sen. Edgardo J. Angara, he brings up the startling fact that 8 million Filipinos have no pension or retirement savings. Even scarier is that the reserves of SSS will run out by 2011; GSIS will run out by 2040 (World Bank study) — I haven’t found which paper this is; SSS will run out 3 years from now? Dire.

Next Step: Information Campaign for Entrepreneurs

SMEs/Entrepreneurs like myself can really maximize the PERA account once DOF finalizes the IRR. I can’t wait. Especially when I encourage tech-entrepreneurship, I’m troubled when I feel they should first get their personal finance in order. Especially now, with the onset of so many work-from-home virtual assistants and freelancers, Multiply/Sulit/eBay businesses, they don’t have the benefit of usual HRD programs. This way, the government helps them save — and maybe make them report their income too.

Sen. Edgardo J. Angara, a principal author of the bill said the country’s savings rate would go up to about 30 percent of gross domestic product, from 19-23 percent, with the signing of the law by the President. He said the scheme is expected to attract eight million individuals, specifically OFWs, and self-employed individuals or entrepreneurs who are not required to contribute to the SSS and the GSIS. Office of the President

How will PERA work?

I, as an “Individual” can contribute up to P100,000 a year to my PERA account. I can invest it in a UITF, mutual fund, bank deposit, etc. Supposedly, I can only choose one administrator (bank or financial company). Most likely Sun Life or BPI for me. What about diversification? I contribute regularly and can withdraw at age 55, proceeds will be tax exempt.

Personal Equity Retirement Account PERA Philippines

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