Personal Equity & Retirement (Pera), tax-exempt retirement planning for Filipinos

The Personal Equity and Retirement (Pera), a tax-exempt retirement planning instrument for Filipinos, is a painless way to start and finance every Filipino’s retirement. I am excited about this since this will be very helpful for Filipinos of my generation.

As the first financial institution to be accredited by the Bangko Sentral ng Pilipinas to administer the PERA, BPI aims to market the product to both individuals and corporations. A Pera account is available to anyone who has a tax identification number, the lender said.

BPI said the Pera is a way to address the prevailing challenges in retirement planning and positioned to serve as a staple product for every working Filipino to diversify and complement their existing investment portfolios.

Enacted into law in 2008, the Pera allows for maximum yearly contributions of Php100,000 and Php200,000 for overseas Filipinos.

Mario Miranda, BPI senior vice president and trust officer at BPI Asset Management, said with more people advancing in age than ever before, and advancement in medical sciences helping prolong life expectancy, voluntary retirement contributions play a crucial role in securing life after employment.

With life expectancy projected to increase to 79 years of age by 2050, and a growing population of Filipinos that are entering retirement age, the social and financial burdens that retirement often brings will significantly strain government and social services.
Compared with what is happening in more developed nations, retirement planning sticks out as a major concern in the Philippines.

In traditional Filipino culture, the family was, to some extent, the ‘pension system.’ I HATE THIS practice, it's lazy and stupid. A year ago, my father declared that he is going to retire but he doesn't know what to do when he retires, wait what? I don't know about you but one of the reasons why I have reallocated my resources to invest in myself to learn financial concepts is to not only mitigate this scenario but also help others like me (or children like me) who may be forced into becoming 'retirement plans' when the time comes that retirement bonus from the company of our parents' runs out!

This is a vicious cycle that can be a burden to one's family. I hope more people (current parents) realize that their children leave the house and establish their own families.

The PERA system is actually very similar to the Roth IRA and 401(k) which Americans enjoy. Read more about PERA Law in detail.