Personal Equity Retirement Account (PERA) Law

[_Qwerty_]

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)

========
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.

[NightWinger]

Totoo kaya to? Or isa na naman gimick ng mga goverment official?

[oldblue]

isa na naman pagkaka PERAhan

[chua_riwap]

If this will be paterned after or would be the same as Singapore's CPF, maganda ito. I am one of the beneficiaries of the CPF, when I was still in Singapore. You have to contribute 20% of your salary (and another 20% from your employer). So monthly, 40% of your salary is being pooled into your CPF. May interest pa ito. When our office transferred me to the ME, nakuha ko yung buong CPF contirbutions ko, after years of working in Singapore. Naging "milyonaryo" ako bigla.

Maganda ito (PERA). Pero, sana naman hwag gamitin ng gobyerno yung pondo (collections/contributions) sa kung saan-saan.

[_Qwerty_]

private banks yata mamamahala dito.. baka inaayos palang nila ang implementing guidelines kasi kapapasa lang nung March..

ang nakikita kong maganda dito eh pwede syang 100% tax credit.. so imbes na babayad sa tax.. eh sa savings napupunta..

yang CPF sa singapore eh medyo parang SSS ang dating nyan.. may employer's share.. tong PERA eh purely savings ito.. parang minimum of Php50,000.00 per year.. tapos pwede lang i withdraw at age 55.. syempre may mga exceptions.. like pwedeng pambili nang bahay.. pampaaral nang anak.. or pam bayad nang hospital bills..

sana nga maging totoo to..

ang tanong na lang.. eh siguradong maraming mag a avail nyan.. so bababa ang tax collection kasi imbes na pinambabayad sa tax eh dyan mapupunta..

[pup2]

SSS pag nag-retire ka, you just get enough per month pang hulog sa ataol -- kulang pa pang hulog sa memorial plan kahit ang laki ng contri both ng members at companies.

Phil gov't should be a minimalist and keep their noses out of things private companies can perform dahil for every peso they collect and spend, palaki lang ng palaki ang pagkakataon makurakot.

[1D4LV]

good idea ito... pero....

a. 80% of our taxpayers are the regular wage earners. kung tax deductible ito, di ang laki ng mawawala sa gobyerno? san nila babawiin ito?

b. magkano ang maximum allowable balance sa account ng isang taxpayer?
c. is the balance per account taxable? magkano naman kaya? 20%, kung may 1M ka, malaki-laki din ang tax.

[Galactus]

I like the premise, but I'll reserve comment after I've read how it works in detail. One thing that has me excited is the provision that it is 100% tax deductible. Unfortunately, I predict this provision will be subject to a lot of debate, and may be trimmed down or a savings cap will be used. DOF bureaucrats know that fixed income earners contribute the bulk of tax collections (withheld at source), if they make PERA savings tax deductible, it will make a major dent in their collection efforts.

[mazdamazda]

ang nakikita kong maganda dito eh pwede syang 100% tax credit.. so imbes na babayad sa tax.. eh sa savings napupunta..

This is not a tax credit or discount or whatever... it is just another tax deductible item.

A simple explanation of how a tax deductible item works:

P500,000 - income for one year
less
P30,000 - deductible as head of the family, etc.
P20,000 - deductible from PERA contribution
====
P450,000 - gross taxable income

P112,500 - total tax due (25% of gross taxable income for example)

(if the PERA contribution is not tax deductible, then total tax due is P117,500 - a P5,000 difference)

Whereas a tax credit works like this:

P500,000 - income for one year
less
P30,000 - deductible as head of the family, etc.
P20,000 - deductible from PERA contribution
====
P450,000 - gross taxable income

P112,500 - total tax due (25% of gross taxable income for example)
less
P10,000 - tax credit for overpayment last year
===
P102,500 - gross withheld tax

[ekimonk]

a law about keeping money coming from the architect of one of the largest scams in the Philippines, the PEA-Amari scam..

gives me doubts about whether i need to trust my retirement money with this..


pero kung bawas tax.. who wants it di ba? e di sige..

sana yun ding mga interest sa housing amortization dapat pambawas tax din..

kawawa naman mga typical pinoy di makabili ng bahay kase kinakain ng interes yung sweldo, tapos kinakain pa ng tax..haay buhay..