Press Release
November 21, 2007

PERA WILL BE A PILLAR OF PENSION REFORM -- ANGARA

Senator Edgardo J. Angara today earnestly pushes for the immediate passage of the Personal Equity and Retirement Account (PERA) bill to create a more dependable and stable pension that will ensure financial security during retirement.

"From January to July 2007, OFWs have remitted US$8.1 billion back to the economy. While these remittances fund immediate needs, a substantial part should also be devoted to saving for one's retirement," said Senator Angara, who chairs the Senate Committee on Banks and Financial Institutions.

Apart from OFWs, the lack of a dependable retirement plan is true with the domestic labor force.

According to National Statistics Office (NSO), the country has a labor force of about 35.81 million. Of the total labor force, only 78% are members of government-initiated pension funds, broken down as follows: 26.49 million for SSS and 1.4 million for GSIS.

However, a World Bank study also showed that the reserves of the government-run SSS and the Government Service Insurance System ("GSIS") would run out by years 2011 and 2040, respectively.

"This means that about 7.92 million Filipinos, including their dependents, will have nothing to look forward to in their retirement years. Moreover, 70% of the domestic workforce is employed by micro, small, and medium enterprises, which do not provide private retirement benefit plans for their employees," said Senator Angara.

With the goal of attracting voluntary long-term savings for both overseas and domestic labor force, Senator Angara has filed the PERA bill.

Under the PERA bill, an individual contributor may make a total maximum annual contribution of P50,000.00 to his PERA account.

Contributions are required to be invested in a qualified "PERA Investment Product", which may be a unit investment trust fund, mutual fund, annuity contract, insurance or pension products, deposit product, pre-need pension plan, shares of stocks, exchange-traded bonds or any other investment product or outlet. The contributor shall be given an income tax credit equivalent to five percent (5%) of the total PERA contribution. Income from the contribution as well as the eventual distribution of the PERA to the contributor shall be tax-exempt.

"Fortunately, our fiscal position has considerably improved since then. We now have the unparalleled opportunity of offering tax-advantaged products, which will trigger a virtuous cycle of more savings, especially during the retirement years of our hardworking Filipinos," said Senator Angara.

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