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Cebu City, Philippines – The Personal Equity Retirement Account (PERA) law will help make the country's capital market grow.
Representative Red Durano (Cebu 5th district) said financial markets such as the Philippine Stock Exchange helped push the approved PERA bill.
“With the way it is, we are really lagging behind Asian countries in terms of the capital market,” Durano said in a press conference on Monday.
The bill was approved by President Gloria Macapagal-Arroyo on August 22.
The bill aims to promote the culture of savings among Filipinos, particularly overseas workers, who are not members of either the Social Security System or the Government Service Insurance System.
Under the PERA law, an individual can make a maximum contribution of P100,000 per year to his/her PERA account. For married individuals, contributions can be as high as P200,000, and for an OFW and his or her spouse, the maximum amount is P400,000.
Contributions should be invested in a qualified "PERA Investment Product," which may be a unit investment trust fund, mutual fund, annuity contract, insurance or pension products, deposit product, pre-need pension plan, shares of stocks, exchange-traded bonds, or any other investment product or outlet.
Contributors are entitled to an income tax credit equivalent to 5.0 percent of the total PERA contribution, according to the law.
Durano said PERA primarily attends to the financial needs of the retirees. It will also promote savings and develop the country's capital market.
A capital market according to the Capital Market News is a market for securities where companies and the government can raise long-term funds. /Reporter Hayde D. Quiñanola with Inquirer report
