THE Department of Finance (DOF) is considering a uniform annual contribution ceiling for the Personal Equity and Retirement Account (Pera) purportedly to enable contributors to save more for their golden years.
A statement issued last Tuesday read that the DOF is studying possible improvements to the voluntary retirement savings and investment program.
In particular, the DOF is looking at imposing a single annual contribution ceiling for both regular contributors and overseas Filipino workers (OFWs).
Currently, regular employees may set aside up to P200,000 annually, while OFWs may contribute twice as much, or P400,000 per year.
The review of the current annual contribution limits will factor in changes in income levels, financial needs of Filipinos and prevailing economic conditions to allow contributors set aside more money for retirement, the DOF said. Other policy and regulatory improvements to address barriers to participation, raise public awareness of the program and improve its overall effectiveness will likewise be taken into consideration.
Stakeholders from the financial and investment sectors, employers, labor groups, retirement and pension institutions and other relevant organizations are encouraged to submit their recommendations on how to make Pera more accessible and attractive to Filipino workers, OFWs, and other eligible contributors.
The DOF said the proposed improvements remain under study as it evaluates stakeholder recommendations and potential policy adjustments to the Pera framework.
The Pera is designed to supplement retirement benefits from the Social Security System, Government Service Insurance System and other programs.
Earnings, as well as withdrawals at 55 years and above, are tax-free. Employers who contribute to their employees’ Pera can also get a 150-percent tax deduction.
Total contributions to Pera reached P757.55 million as of end-June, 45.5 percent higher than the P521.36 million recorded a year earlier.
The number of Pera contributors likewise increased to 30,055 contributors in the first half from 6,193 contributors in the same period last year.
‘Our goal is to make Pera a more effective tool for helping Filipinos prepare for retirement. We welcome stakeholder recommendations on how to improve the program, strengthen its incentives, and encourage more people to build long-term savings,’ Finance Secretary Frederick D. Go was quoted as saying in the statement.