Legislators want PERA implementing rules out soon

MANILA, Philippines - Legislators on Friday called on the Executive to immediately draw the implementing rules of the Personal Equity Retirement Account (PERA) measure, which was signed into law by President Gloria Macapagal Arroyo Friday. Sen. Edgardo J. Angara, one of the law’s principal authors, underscored the need to encourage savings among Filipinos, especially overseas Filipino workers (OFWs), who would otherwise use their money on consumer items. "Certainly, we need to hasten the creation of the implementing rules [of the PERA law]. We need every avenue that will encourage savings. We need a vehicle to enable the OFWs to save," he said. "If Filipinos are not given alternatives, they will just spend their money. If there are ways through which they can save then they will have money during the rainy days. The money can also be used for investments that can create jobs," he said. The Personal Equity and Retirement Account Act of 2008, or Republic Act 9505, was signed into law Friday by Ms. Arroyo in Malacañang. It was ratified by Congress last June and was formally transmitted to the President last month. Assigned to draft the law’s implementing guidelines are the Finance Department, the Bureau of Internal Revenue, Bangko Sentral ng Pilipinas, the Securities and Exchange Commission and the Insurance Commission. Finance Usec. Gil S. Beltran on Thursday said the guidelines are already being drawn but no timetable had been set as to when these would be completed. In a phone interview, Aurora Rep. Juan Edgardo M. Angara, also a principal author of the measure and the senator’s son, said the agencies must come up with the implementing rules before January 2009, when tax incentives granted by the law would start to take effect. "I hope they (agencies) finish the implementing rules before January 2009 so Filipinos who set up a retirement account can immediately avail of the tax perks," he said. The PERA law aims to set up private pension schemes that would allow workers to save money for their retirement Contributors can open up to five accounts to be managed by one administrator, which can be a bank or a financial company. There will be separate custodians of funds and a designated investment manager. Administrators can be investment managers. The contributions can be invested in mutual or unit investment trust funds, stocks, and other financial products. A contributor may make a total maximum annual contribution of P100,000 or its equivalent in any convertible foreign currency. If the contributor is married, each of the spouses can make a contribution of P100,000. The contribution can be as high as P400,000 for an OFW and his or her spouse. Income and interest from contributions will be tax-exempt provided the contributor does not withdraw the funds before reaching the age of 55. A contributor can also claim an income tax credit equivalent to 5% of the total PERA contribution. A contributor may choose to contribute beyond the maximum account but the excess would no longer be entitled to the tax credit. Employers can also make contributions to their employees’ accounts as long as they pay the required Social Security System premiums. The law is expected to attract eight million individuals, specifically OFWs, self-employed individuals or entrepreneurs who are not required to contribute to the Social Security System or the Government Service Insurance System.