PERA — the first step to a wealthier retirement

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Filipinos are a hardworking people, always ready to log long hours of work for the benefit of their families. Seeing the parents, siblings and children enjoy the fruits of their labor is a source of happiness and pride. Typically, one would save up for a home, a car, children’s education and the ever-present celebration of milestones in life. However, because of this selflessness, some often forget to take care of themselves, especially when it comes to retirement.

Often, one hears someone say “Retirement is still years away, I will just start saving for it in 10 years” or “I keep a bit of savings for my retirement and my kids will take care of me when I retire.” Some solely depend on retirement benefits from government pension agencies or the corporate retirement pay mandated by law.

Some, including millennials, do invest for their retirement, albeit irregularly.

When it comes to retirement, people are usually short in discipline and planning, mainly because only a few thinks about retirement at an early age. Then they face the reality of retirement without a retirement plan.

This is where the Personal Equity and Retirement Account (PERA) comes in. PERA is a voluntary retirement savings plan that encourages individuals to save and plan for retirement while enjoying tax incentives both from the amount contributed and the income from investments. Any Filipino, of legal age, earning income locally or from abroad and with a Philippine Tax Identification Number is eligible to open a PERA. An individual may invest up to P100,000, and for those living and working overseas, up to P200,000 per year.

As PERA Contributors, one will receive the following benefits:

Income earned is tax exempt;

Annual contributions are eligible to a five percent tax credit, subject to issuance of BIR regulation;

Upon reaching 55 years of old and have made at least five years of contributions, PERA withdrawals are not subject to income tax and

In the event of the untimely demise of the contributor, the PERA funds are not subject to estate taxes.

PERA, being a voluntary retirement plan, allows anyone to make all the investment decisions, giving them control over their retirement goals.