Article 150Supplement v1, p. 150

COMMERCIAL LAWS SUPPLEMENT

SECTION 1. Title . - This Act shall be known as the

" Personal Equity and Retirement Account (PERA) Act

of 2008 " .

SEC. 2. Declaration of Policy . - It is declared the policy of

the State to promote capital market development and

savings

mobilization

by

establishing

a

legal

and

regulatory framework of retirement plans for persons,

comprised

of

voluntary

personal

savings

and

investments.

The

State

recognizes

the

potential

contribution of PERA to long-term fiscal sustainability

through

the,

provision

of

long-term

financing

and

reduction of social pension benefits.

SEC. 3. Definition of Terms . -Unless the context requires

otherwise, the following terms shall have the following

significance as used in this Act:

(a) "Administrator" is an entity accredited by the Bureau

of Internal Revenue (BIR), after pre qualification by the

concerned Regulatory Authority. The Administrator shall

be responsible for overseeing the PERA, whose core

functions shall include, but not limited to: reporting on

contributions made to the account, computing the values

of

investments, educating the Contributor, enforcing

PERA

contributions

and withdrawal limits, collecting

appropriate taxes and penalties for the government,

securing

BIR

Income Tax Credit Certificates for the

Contributor, consolidating reports on all investments,

income, expenses and withdrawals on the account and

ensuring

that

PERA

contributions

are

invested

in

accordance with the prudential guidelines set by the

Regulatory Authorities.

(b) "Contributor" is any person with the capacity to

contract and possesses a tax identification number. The

Contributor establishes and makes contributions to a

PERA.

(c) "Custodian" is a separate and distinct entity unrelated

to the Administrator, accredited by the Bangko Sentral ng

Pilipinas,

providing

services

in

connection

with

the

custodianship of funds and securities comprising the

PERA investments. The Custodian shall be responsible for

receiving

all

funds

in

connection

with

the

PERA,

maintaining custody of all original securities, evidence of

deposits or other evidence of investment. The Custodian

shall operate independently from the Administrator. The

Custodian is required to report to the Contributor and the

concerned Regulatory Authority at regular intervals all

financial transactions and all documents in its custody

under a PERA.

(d) "Early withdrawal" shall pertain to any withdrawal prior

to the period of distribution as set forth under Section 12

hereof.

(e) "Investment Manager" is a regulated person or entity

authorized

by

a

Contributor

to

make

investment

decisions for his PERA. As such, it shall assume fiduciary

duty

and

responsibility

for

PERA

investments.

An

Investment Manager shall act with utmost fidelity by

observing

policies

directed

towards

confidentiality,

scrupulous care, safety and prudent management of

PERA funds.

(f) "Personal Equity and Retirement Account (PERA)"

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.

(g) "PERA Investment Product" refers to a unit investment

bust

fund, mutual fund, annuity contract, insurance

pension products, pre-need pension plan, shares of stock

and other securities listed and traded in a local exchange,

exchange-traded bonds or any other investment product

or outlet which the concerned Regulatory Authority may

allow for PERA purposes: Provided , however , That to

qualify as a PERA investment product under this Act, the

product must be non-speculative, readily marketable,

and with a track record of regular income payments to

investors. The concerned Regulatory Authority must first

approve the product before being granted tax-exempt

privileges by the BIR.

(h) "Regulatory Authority" refers to the Bangko Sentral ng

Pilipinas

(BSP)

as

regards

banks,

other

supervised

financial institutions and trust entities, the Securities and

Exchange Commission (SEC) for investment companies,

investment houses stockbrokerages and pre-need plan

companies, and the Office of the Insurance Commission

(OIC) for insurance companies.

(i) "Oveseas 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

No.

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)

hereof.

SEC. 4. Establishment of a PERA . - 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 (1) Administrator for all his PERA.

The

Contributor shall make all investment decisions

pertaining to his PERA. However, he has the option of

appointing an Investment Manager, either in writing or in

electronic form, to make investment decisions on his

behalf without prior consultation.

SEC. 5. Maximum Annual PERA Contributions . - A

Contributor

may

make

an

aggregate

maximum

contribution

of

One

hundred

thousand

pesos

(P

l00,000.00) or its equivalent in any convertible foreign

currency at the prevailing rate at the time of the actual

contribution, to his her PERA per year: Provided , That if

the Contributor is married, each of the spouses shall be

entitled

to

make

a

maximum

contribution

of

One

hundred thousand pesos (P l00,000.00) or its equivalent

in any convertible foreign currency per year to his her

respective PERA: Provided , further, That if the Contributor

is an overseas Filipino, he shall be allowed to make

maximum contributions double the allowable maximum

amount. A Contributor has the option to contribute more

than the maximum amount prescribed herein: Provided ,

That the excess shall no longer be entitled to a tax credit

of five percent (5%). The Secretary of Finance may adjust

the maximum contribution from time to time, taking into

consideration the present value of the said maximum

contribution

using

the

Consumer

Price

Index

as

published by the National Statistics Office, fiscal position

of the government and other pertinent factors.

SEC. 6. Employer's Contribution . - A private employer

may contribute to its employee's PERA to the extent of

the

amount

allowable

to

the

Contributor:

Provided ,

however :

That

the

employer

complies

with

the

mandatory Social Security System (SSS) contribution and

retirement pay under the Labor Code of the Philippines.

Such contribution shall be allowed as a deduction from

the employer's gross income. The Contributor, however,

retains the prerogative to make investment decisions

pertaining to his PERA.

SEC. 7. Separate Asset . -The PERA shall be kept separate

from the other assets of an Administrator/Custodian and

shall

not

be

part

of

the

general

assets

of

the

Administrator/Custodian for purposes of insolvency.

SEC.

8.

Tax

Treatment

of

Contributions .

-

The

Contributor

shall

be

given

an

income

tax

credit

equivalent

to

five

percent

(5%)

of

the

total

PERA

contribution: Provided , however : That in no instance can

there be any refund of the said tax credit arising from the

PERA contributions. If the Contributor is an overseas

Filipino, he shall be entitled to claim tax credit from any

tax

payable

to

the

national

government under the

National Internal Revenue Code of 1997, as amended.

SEC. 9. Tax Treatment of Investment Income . - All

income earned from the investments and reinvestments

of the maximum amount allowed herein is tax exempt.

© Compiled by RGL

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