BSP launches digital version of personal retirement investment tool due to underutilization

The Bangko Sentral ng Pilipinas (BSP) on Tuesday launched the digital version of the Personal Equity Retirement Account (PERA), an investment tool for retirement.

Launched in December 2016, the PERA is currently “underutilized,” according to BSP Governor Benjamin Diokno.

“Since its implementation in December 2016, the PERA industry has not gained significant momentum. As of July 29, 2020, only 1,586 Filipinos had been investing in PERA, with total contributions of P137 million,” Diokno said during the virtual launch of digital PERA.

“To bring PERA closer to the Filipino people, the BSP—together with relevant regulatory agencies and market participants—embarked on a collaborative effort to bring convenient and affordable retirement savings through digital PERA,” he said.

Digital PERA is a one-stop shop, wherein investors can see various investment products, while acting as a platform where they can open, access, monitor their PERA accounts, and settle transactions via InstaPay and PESONet through online banking.

“Of the total contributors, 1,099 or 69% are locally employed, 273 or 17% are Overseas Filipino Workers (OFWs), and 214 or 14% are self-employed,” Diokno said.

“On average, OFWs have higher contributions at P110,000; local employed workers at P82,000; and the self-employed at P76,000. These figures remain regrettably low,” he said.

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

The PERA law, crafted in 2008 as Republic Act 9505, 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, according to the BSP.

The PERA law allows individuals to open up to five PERA accounts and these can be invested in specific PERA-accredited product lines.

Overseas Filipino workers are provided the additional benefit of being able to invest up to P200,000 annually which is twice the normal limit.

Individuals who like to open their PERA will do so thru accredited PERA administrators such BDO Unibank and Bank of the Philippine Islands.

“Leveraging on digital technology, we revolutionized the PERA investment process by creating a one-stop shop digital experience for investor education, client on-boarding, settlement of transactions, and monitoring of PERA investments. With this platform, Filipinos can now conveniently open or access their PERA account and invest 24/7, anywhere in the world using a mobile gadget,” Diokno said.

“You can immediately start investing from the comfort of your own home, without worrying about getting COVID-19. At the same time, the cost of online transaction is relatively cheaper. PERA contributors can send funds via InstaPay and other digital means,” he said.

The digital PERA platform also promotes integration and interoperability, according to the BSP chief.

“It will connect various PERA market participants and products that will facilitate a more efficient processing of PERA transactions,” Diokno said.

“Consequently, this could then easily expand the PERA ecosystem and provide opportunity for more banks and other financial institutions to join the PERA ecosystem as product providers or even as administrators,” he said

The Bureau of Internal Revenues’ ePERA system, on the other hand, will facilitate processing and generation of electronic tax credit certificates (eTCCs) and acceptance of electronic reports from PERA administrators.

“This completes the end-to-end digitization of PERA,” Diokno said.

The central bank chief said traditional investment schemes for PERA are still available for the less technology savvy or those who find it challenging to transact online.—AOL, GMA News