Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla announced Monday, March 6, that the yearly contribution to the Personal Equity and Retirement Account (PERA) has been increased by 100 percent to “encourage more Filipinos to prepare for retirement through the program.” “The increase in the limits provides our kababayans with greater opportunities to ensure their financial security. It also supports the government’s broader thrusts of mobilizing individual savings for capital market development and generating funds for long-term projects,” said Medalla. PERA is the government’s voluntary retirement savings program. The BSP, which leads other government agencies in the PERA program, raised the annual limits from P100,000 to P200,000 for locally employed and self-employed individuals, and from P200,000 to P400,000 for Overseas Filipinos. The higher PERA contributions will take effect this year. It was recently approved by Department of Finance (DOF) Secretary Benjamin E. Diokno upon the recommendation of the PERA Inter-Agency Board led by BSP, and includes the Securities and Exchange Commission, the Insurance Commission, and the DOF’s Bureau of Internal Revenue. The BSP also approved the removal of the basic security deposit for the faithful performance of a PERA Administrator’s duties, which was previously set at 0.5 percent of the book value of PERA assets. “This is expected to lower the cost of administering PERA assets, which may impact the contributors through lower charges on PERA. This is likewise seen to encourage more BSP-supervised financial institutions to participate in the PERA ecosystem,” said the BSP on Monday. BSP Circular No. 1168 issued last Feb. 23, which brought down the rate for the PERA security deposit to zero percent was implemented immediately. Besides the security, PERA administrators are required to maintain certain capital, surplus and undivided profits as administrators. A Filipino or any regular tax-paying individual can now contribute as much as P200,000 while overseas Filipinos have a higher cap of P400,000 annually. By the time the contributor reaches 55 years old and have invested in PERA for at least five years, they can redeem the PERA investment tax-free. PERA also offers a five percent tax credit on the contribution that can be used to pay for national income tax liabilities and a tax-free distribution on qualified withdrawal of PERA investments. As of end-2022, there are 5,100 PERA contributors, up 16 percent from 4,382 in 2021. PERA contributions also increased by 30 percent in 2022 to P329.55 million from P253.35 million in 2021. Of the total, about P223.71 million are investments by 3,600 employed individuals. Meanwhile, 785 self-employed individuals contributed P45.25 million while 721 overseas Filipino workers invested P60.58 million. The BSP has said that PERA is a “superior retirement savings option” because of the tax benefits and tax exemptions on earnings from PERA investments. In September 2020, the BSP launched the digital PERA to encourage more investments, especially overseas Filipinos. 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.