New rules and regulations have been agreed to implement the Personal Equity and Retirement Account (PERA) Act for investment funds, particularly pensions.
Under the Act, each person can invest up to PHP100,000 (USD2,150) in approved PERA funds – with married couples benefiting from the double allowance of PHP200,000 – while overseas Filipino workers can also invest up to PHP200,000. Contributions up to those limits will be granted a tax credit of 5%, and income from the investments will be tax-free.
Investments in excess of the maximum contribution will not be allowed the tax credit, nor will investments ceased or withdrawn within a minimum five-year period. Investors will normally be allowed to access their PERA funds when reaching the age of 55.
Proceeds of approved funds can be invested, for example, in investments trust funds, annuities, insurance pension products, and bonds traded in the Philippine Stock Exchange. The regulations also stipulate the duties and responsibilities of PERA market participants, such as fund administrators, investment managers, and custodians.
In addition to providing supplementary retirement benefits (over and above the state pension), it was said that the new Act would bring investment opportunities to small retail investors, while maintaining strict prudential guidelines. It would also help to develop the domestic capital market.
A comprehensive report in our Intelligence Report series titled "The Lowtax International Pensions Report" which has an in depth view on The Mechanics of Pensions Provision, 'High-Tax' Country Pension Regimes and 'Lowtax' Jurisdictions In Which To Locate Pensions Savings, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report14.asp
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