Securing Filipino Savings with BSP’s PERA

Having your own savings account is very important. It will be a means you have something to use when you are out of work or in need of money in times of emergencies like hospital bills you have to pay. Usually, your savings is most useful by the time you reach your retirement age when you have to stop working and receiving an income. Opening a savings account is advisable to all since it is the most secure way to keep your money. The disadvantage is that banks offer a negligible amount of interest which is even taxable, so your money just ends up for safe-keeping.  Opening a savings account could also be difficult as there are many documents required and there is an imposed minimum initial deposit and maintaining balance for each account.

If you are having a hard time opening or maintaining a savings account in banks, consider turning to the Personal Equity and Retirement Account (PERA). 

What is PERA?br>

PERA is an initiative of the Bangko Central ng Pilipinas (BSP) through the enactment of RA 9505 otherwise known as the PERA Act of 2008. This is a discretionary savings and investment account that can assist you in getting ready for your retirement. The difference between PERA from other commercial savings accounts is that this facility does not only keep your money, but it grows your savings as well.

The goal of this program is to support fiscal sustainability for a long period of time by the means of long-term financing. PERA is similar to the program of the United States of America  401(k)  pension account.

Availing PERA is much recommended for many reasons. First, this program provides a five percent tax credit. This benefit can be used to lessen your income tax liabilities. This tax credit can also be extremely helpful to Overseas Filipino Workers (OFWs) since they can use it against their national internal revenue tax liability. Second, you will receive tax exemptions through PERA. The income that you will receive from this savings and investment facility will be exempted from tax. This tax exemption covers capital gains tax, regular income tax, final withholding tax on dividends, 10 percent tax on dividends, and income tax derived from withdrawals by the time you reach 55 years of age and you have at least five consecutive yearly contributions. Your PERA account itself will also have a tax incentive. With this, the PERA account will not be considered when computing for the tax charged for the transfer of properties otherwise known as estate tax, when you pass away. The deductions on the estate tax could be from five to 20 percent to be determined by the value of the possessions to be passed on.

Terms and conditions for new clients

In addition to this, the minimum contribution for starters is 1,000 pesos not including service fees. You are also allowed to increase your contribution to a maximum amount of 100,000 pesos for ordinary borrowers. Meanwhile, OFWs can go for a maximum of 200,000 pesos. You may still increase your contributions anytime even if you have already been availing of the service. Surplus amounts, however, will not be credited for tax benefits.

For those who want to avail of the program, the requirements are as follows:

1.     at least 18 years old; 
2.   has existing source of income;
3.   valid government IDs including TIN ID;
4.     latest Income Tax Return; and 
5.   has an existing bank account with BPI, BDO, or Landbank.

For Overseas Filipino Workers, they are required to submit an Overseas Employment Certificate (OEC) and to personally appear in the office. If a personal appearance is not possible, a representative is allowed provided he has an authorization letter to act on your behalf. If the representative is your spouse, your Marriage Certificate must be presented. In cases where children are authorized, they must show a Certified True Copy of their birth certificate issued by the Philippine Statistics Authority.

The next question is, what are the BSP accredited financial institutions that accept and process PERA applications? These banks include Bank of the Philippine Islands (BPI), Banco de Oro (BDO), and Landbank of the Philippines (LBP). Bring the requirements that you prepared to your chosen bank so that they can present to you specific PERA products that they offer, and which are suitable to your risk level. You have many options in terms of money market funds and bonds. A bank personnel will also link you to PERA administrators so that they could describe in detail how PERA works and suggest what is the best PERA investment product for you.

Pros and cons of PERA 

Since PERA is different from most savings accounts, you cannot easily withdraw your money until you are 55 years old and you have a minimum payment contribution of five years. You can withdraw your contributions now, but you will be charged with additional fees and penalties, which of course, you are not willing to pay. That is why the best thing to do is wait for the right time for withdrawal so that there will be much time for you to multiply your money.

Despite the benefits that can be derived from the account, there are many challenges in the implementation of PERA. This savings account facility has been existing for more than 10 years already, but many Filipino citizens are not still aware of it. Records show that only 1,500 people have availed of the benefits of the savings facility. The problem here is that there is an insufficient promotion and not enough information dissemination to encourage the public to sign-up and try the savings facility.

Due to these problems, BSP transformed PERA into a digitalized platform to let accredited bank partners provide services to possible customers more easily and conveniently and allow BSP to be more reachable to the people.

During these uncertain times, having a savings account is a need. PERA could truly help you in making sure that your money is safe and growing.  

Alternative to PERA  

This savings account is truly very useful and important but the problem is, you cannot withdraw money from it immediately in case of emergency.  For urgent loans, there is another way.

If you urgently need money, you can take a payday loan Philippines. Robocash offers many great short-term loan options for Filipinos. There are only three requirements to acquire a loan from the website. The applicant must be a Filipino citizen from age 21 to 70 years old. Robocash will only require a valid government ID, a mobile phone number that is not blocked, and the registration to the website. This automated website has been benefiting many people to acquire fast and easy loans because it is easy to access. Moreover, Robocash will not require numerous documents, unlike banks. Applicants can choose independently the amount and term of a loan. There are also many options for borrowers to receive money conveniently. Robocash operates without days off, even on holidays, so they accept applications 24 hours a day, 7 days a week.