BILL PROVIDING SAVINGS FOR RETIREES NEARS ENACTMENT PERA FUND APPROVED AT BICAM LEVEL; RATIFICATION EXPECTED TODAY

A bill creating a Personal Retirement Account (PERA) fund to ensure financial stability and added opportunities for retirees is closer to becoming a law, having been approved by a bicameral conference committee.

"At present, coverage through social security is limited compared to the entire population, and monthly pensions and benefits may be too limited for retirees to properly enjoy and use. With this PERA plan, we can provide for more retirees and give them more options with their money compared to what are now available," said Senator Mar Roxas, author of Senate Bill No. 1194, the Senate version of the PERA bill.

He noted that even the 1.4 million people covered through the Government Service Insurance System (GSIS) and the 26 million Social Security System (SSS) members have little control over their contributions, and the savings generated were further reduced through taxation.

According to the measure, an individual can open a special retirement account through any bank, with a maximum deposit of P20,000. A married couple can open a joint account with an initial deposit of not more than P40,000. The maximum monthly contribution to an account is limited to 10% for an individual and 15% for a married couple.

The bill also provides for tax deductibility of the deposits, when the employee is not covered by employer-sponsored retirement, or if an individual's annual gross income does not exceed P150,000 or if a married couple's annual gross income does not exceed P300,000. A tax will only be imposed for the early withdrawal of these funds.

Roxas said the government must now begin to educate employers, employees and financial institutions on the new type of account, in order for its benefits to be maximized by the public.

"PERA is a new tool that is already being enjoyed in other countries and the time has come for Filipinos to avail of it as well. This will require an information campaign on how PERA can benefit each and every worker," he said.

Roxas added that he expected the bill to be ratified by the Senate today or before session adjourns on June 11.