PERA stands for  “Personal Equity and Retirement Account,” which refers to the voluntary retirement account established by and for the exclusive use and benefit of the Contributor for the purpose of being invested solely in PERA investment products in the Philippines. The Contributor shall retain the ownership, whether legal or beneficial, of funds placed therein, including all earnings of such funds. He makes all investment decisions pertaining to his PERA, with an option to appoint an Investment Manager.

A Contributor may create and maintain a maximum of five (5) PERA, at any one time, provided that the Contributor shall designate and maintain only one Administrator for all his PERA.

It is governed by Republic Act 9505, also known as the “Personal Equity and Retirement Account (PERA) Act of 2008”, which was approved on 22 August 2008.

Who is a “Contributor”?

A “Contributor” is any person with the capacity to contract and possesses a tax identification number. The Contributor establishes and makes contributions to a PERA.

How much is the maximum annual PERA contribution?

Subject to subsequent adjustment by the Secretary of Finance, the aggregate maximum contribution is P100,000, or its equivalent in any convertible foreign currency at the prevailing rate at the time of the actual contribution, for each Contributor per year.

If the Contributor is married, each spouse may make a maximum contribution of P100,000.

If the Contributor is an Overseas Filipino, the maximum contribution is double the allowable maximum amount. “Overseas Filipino” refers to (1) an individual citizen of the Philippines who is working or deriving income from abroad, including one who retained or reacquired his Philippine citizenship under Republic Act 9225, otherwise known as the “Citizenship Retention and Reacquisition Act of 2003”; or (2) the legitimate spouse, whether or not said spouse is of Filipino ancestry, and the children of the Filipino citizen mentioned in item (1).

While a Contributor has the option to contribute more than the maximum amount prescribed, the excess shall no longer be entitled to a 5% tax credit.

What is the benefit to employers if they contribute?

If a private employer decides to contribute to its employee’s PERA, the amount shall be allowed as a deduction from the employer’s gross income. However, the employer must also comply with the mandatory SSS contribution and retirement pay.

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