As I understood, this was passed and became a law last March 2007. My question is, when will banks implement this?? Or is it the SSS / GSIS that will implement this??

Instead of paying taxes, taxpayers can just contribute to this PERA fund. Pretty much like the IRA in the US.

What's your take on this??

(mods if there's an existing thread, kindly merge na lang)

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House Bill No. 192
Introduced by Rep. JOSE C. DE VENECIA JR.


Explanatory Note
About 6.2 million Filipinos or 20% of the country's total labor force are not covered by any type of retirement plan. This segment of the population is thus deprived of the privilege of enjoying security in their retirement years. As of December 2000, only about 23.22 private or self- employed employees are members of the Social Security System (SSS) and another 1.7 million government workers are covered by the Government Service Insurance Funds administered by the Government Service and Insurance System (GSIS).

Savings accounts can not be depended upon to provide financial security to these Filipinos since most families barely make both ends meet and are thus not able to save very much. Moreover, retirement or pension plans being offered by pre-need companies are quite expensive and can only be afforded by high salary earners. A savings scheme is thus needed to encourage the majority of Filipinos to save for their retirement years. The Personal Equity Retirement Account (PERA) is a form of savings scheme that will help improve the country's savings rate, : which is one of the lowest in the region.

The bill provides that contributions made to PERA per taxable year shall be 100% deductible from the taxable income of the contributor I subject to certain conditions. This aims to encourage more people to invest their money in PERA. This scheme is similar to the US experience wherein savings of up to $2000 in mutual fund are tax deductible as Individual Retirement Accounts (IRA). This paved the way for mutual funds in the US to reach $2.5 trillion in 1996 from $50 million in the 1970s prior to the IRA. In Singapore, employee contribution to the Central Provident Fund (CPF), which amounts to 25% of employee income, is also tax-free. The CPF not only serves as pension fund for Singaporeans but is also use by members for other purposes such as housing. The amount of the CPF allows the government to finance infrastructure projects such as roads, airports, seaports, mass transport and high rise public housing.

Non-members of government insurance funds can avail of PERA. Those with very limited retirement plan options are especially targeted to invest in this scheme. Investors will be allowed to keep tract of their funds and even directly manage their PERAs as an investment portfolio.

Through PERA, Filipinos can prepare for and enjoy their retirement years. They are assured of a financially secure future. The bill will also facilitate an increase in savings because funds deposited to the PERA can be invested in securities including ordinary shares of stock. It will also offer facilities to move funds to high investment levels and take advantage of prevailing market conditions. This means more funds will be available for investments to spur economic growth.