SEC to list eligible PERA investment products

The Securities and Exchange Commission (SEC) said Tuesday it will soon release the list of equities, bonds, funds and other securities in which Personal Equity and Retirement Account (PERA) funds may be invested.

In a statement, the SEC said it released on May 17 for public comment the proposed rules on qualified and/or eligible PERA investment products, pursuant to Republic Act No. 9505, or the PERA Act of 2008, and its Implementing Rules and Regulations.

PERA, as a voluntary retirement account, provides a framework to help Filipinos 18 years old and above prepare for their eventual retirement.

The PERA law, meanwhile, provides tax benefits while instilling the discipline of saving money by making annual contributions to their own account.

Unlike existing national or corporate pension schemes, PERA does not require a deduction from one’s salary to accumulate funds.

The retirement investment tool relies on an individual’s decision to invest up to P100,000 annually to prepare for retirement.

The SEC said that under its proposed rules, securities that are registered pursuant to the requirements of Republic Act No. 8799 or the Securities Regulation Code and Republic Act No. 2629 or the Investment Company Act “are deemed to be eligible PERA investment products.”

PERA-eligible investment products may include the following:

• newly formed mutual funds, including any sub-fund of an umbrella fund and exchange traded funds whose fund managers have a track record of at least five years, and whose names contain the words “Personal Equity and Retirement Account” or “PERA”
• real estate investment trust shares
• corporate bonds with an investable rating issued by an accredited credit rating agency
• equity securities that form part of the Philippine Stock Exchange index (PSEi)

The SEC said that government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with BSP requirements will also be considered eligible PERA investment products.

The corporate regulator added that it may qualify other securities to be eligible as PERA investment products if the product is non-speculative, readily marketable, and has a track record of regular income payment to investors.

“A security loses its eligibility as a PERA investment product when the SEC declares it to be ineligible. A registered equity security may also lose its eligibility if its registration statement gets suspended or revoked, or in the case of a PSEi member security, if it is removed from the PSEi,” the SEC said.

“Meanwhile, corporate bonds issued by banks may be deemed ineligible if they are declared to be in default by a competent authority or person in accordance with applicable laws, rules, and contracts, and if their credit rating is downgraded to a non-investable grade,” it added.

The corporate regulator said that a security that has been deemed eligible by the SEC may lose its eligibility after it has been found to have lost one or all of the required characteristics of being non-speculative, readily marketable, and provider of regular income payment.

However, the SEC said that an investment in a security that is later declared to be ineligible as such PERA investment product may continue to be authorized to be part of the PERA portfolio, provided that any subsequent investments by a contributor in said security after being declared as ineligible, shall not qualify to be made part of the PERA portfolio.

The rules will require issuers of securities that have been qualified by the SEC to be eligible PERA investment products to comply with reportorial requirements set by the commission, the corporate regulator said.

“Failure to abide by the guidelines and other laws, rules, and relevant regulations will result in administrative penalties, and other civil and criminal liability provided for under applicable laws,” the SEC said.—LDF, GMA News