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THE newly approved pension scheme, Personal Equity Retirement
Account (PERA), will to beef up the Philippines’ savings rate, a
lawmaker assured Friday.
In a briefing, the bill’s author Sen. Eduardo
Angara said PERA will raise country’s saving rate to between 30
percent and 40 percent from the current 19- to 25-percent range
“This is one of the best ways to accumulate
savings. It will greatly augment Filipinos’ retirement plan,”
Angara told reporters.
PERA account is a supplementary private
retirement plan for all public and private employees that especially
targets overseas Filipino workers. Congress recently approved the
bill at the bicameral level and Malacañang is expected to sign it
into law soon.
“People are generally scared of retiring, and
especially Filipinos because we are not a savings-conscious [nation]
and the pension we get from either SSS or GSIS is usually inadequate
for our sunset years,” Angara said.
The National Statistics Office reported that the
country has a labor force of about 35.81 million, representing a
64-percent labor participation rate. Of this, only 78 percent are
members of government-initiated pension funds: 26.49 million for the
Social Security System and 1.4 million for Government Service and
Insurance System.
Angara said about 8 million Filipinos have no
pension or retirement savings to look forward to. He added: “Take,
for instance, the experience of Overseas Filipino Workers who make a
huge contribution to our economy in terms of foreign remittances.
Their remittances provide for their families’ present
consumption—buying a house, paying for their kids’ tuition,
setting up small businesses—but leave very little savings for
one’s retirement.”
Under the PERA bill, an individual contributor
may make a total maximum annual contribution of P100,000 to his PERA
account. The contributor shall be given an income tax credit
equivalent to 5 percent 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. This amount can be withdrawn
when the contributor reaches the age of 55.
-- Chino S. Leyco
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