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TIME DEPOSITS are now among the eligible investment products under the Personal Equity and Retirement Account (PERA), the Bangko Sentral ng Pilipinas (BSP) said on Tuesday. “Retirement planning should be simple, accessible, and within reach of every Filipino,” BSP Deputy Governor Lyn I. Javier said in a statement.
the Personal Equity and Retirement Account , the Bangko Sentral ng Pilipinas said on Tuesday.
“Retirement planning should be simple, accessible, and within reach of every Filipino,” BSP Deputy Governor Lyn I. Javier said in a statement. “By introducing PERA time deposits, we are providing another practical option for individuals who want to build their retirement savings through a product they already understand and trust.
” Financial institutions seeking to offer PERA-eligible time deposits must meet the BSP’s prudential criteria and obtain accreditation from the Bureau of Internal Revenue, the central bank said in a memorandum updating PERA guidelines. After the bank’s board of directors approves their PERA time deposit program, they have 10 banking days to submit a notification letter, corporate secretary’s certificate, and certificate of compliance with the prudential criteria to the BSP.
Before offering or accepting any placements, banks must also enter into a written arrangement with an accredited PERA administrator to ensure retirement contributions are properly received, with the administrator responsible for managing the contributor’s account. Unlike regular time deposits, a PERA time deposit is part of a contributor’s PERA and may qualify for applicable tax incentives. Still, being bank deposits, they are subject to applicable banking regulations and Philippine Deposit Insurance Corp. deposit insurance rules.
The regulator added that the maturity or pre-termination of a PERA time deposit will not be considered a withdrawal, as long as the proceeds remain in the contributor’s account for holding, transfer, or reinvestment in accordance with PERA rules. PERA time deposits should likewise follow market-based interest rates, with a minimum maturity of 30 days, the BSP said.
Banks are likewise mandated to disclose to contributors the interest rate, effective annual yield, fees, tax benefits, pre-termination conditions and withdrawal rules, while ensuring all transactions are logged in the BSP’s PERA registry PERASys. The move expands the range of PERA-qualified financial products, which include unit investment trust funds, stocks, real estate investment trusts, and government securities.
“The inclusion of time deposits gives Filipinos another option for retirement savings,” the central bank said. “It may appeal to savers who prefer a familiar savings product with predictable returns and relatively lower investment risk. ” “The BSP encourages Filipinos to make retirement saving a regular part of their financial planning and to choose PERA products that match their financial goals, investment horizon, and risk preferences.
” PERA, created under Republic Act No. 9505 in 2016, is a voluntary retirement saving program which supplements benefits from the Social Security System, Government Service Insurance System, and employer-provided plans. Contributors aged 18 and above with a tax identification number are allowed to open a PERA. Self-employed and locally employed contributors may contribute P200,000 annually, while overseas Filipino workers may invest up to P400,000.
As of end-June, accumulated PERA contributions jumped by 45.3% year on year to P757.554 million from P521.363 million, central bank data showed. The total number of PERA contributors likewise surged to 30,055 from 6,193 in the same period last year. —
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