Philippine finance department studies PERA contribution cap overhaul

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PERA cap overhaul review

Highlights

Finance Secretary Frederick D. Go is reviewing PERA's annual contribution limits, currently set at P200,000 for regular contributors and P400,000 for overseas Filipino workers, to increase retirement savings.
The Finance department is considering a uniform yearly cap and additional policy measures to simplify PERA participation, lower barriers, and strengthen program awareness.
Central bank data show PERA contributions rose 45.3% year on year to P757.554 million as of end-June, with contributors increasing to 30,055 from 6,193.

Retirement savings rules under review

As reported by BusinessWorld, citing the Department of Finance, Finance Secretary Frederick D. Go is assessing possible changes to the Personal Equity and Retirement Account, or PERA, program to expand participation in long-term investments and deepen the Philippine capital market.

The review includes the current annual contribution thresholds and whether revisions would let savers set aside more for retirement while reflecting shifts in income, financial needs and broader economic conditions. The department is considering a uniform yearly limit to simplify the framework, which currently allows regular contributors to invest up to P200,000 a year and overseas Filipino workers up to P400,000.

PERA was created under Republic Act No. 9505, or the PERA Act of 2008, and allows eligible individuals to place funds in approved financial products with tax incentives under existing rules. The program is intended to supplement retirement benefits from the Social Security System, Government Service Insurance System and other schemes.

The Finance department is also examining additional policy and regulatory measures to lower participation barriers and strengthen awareness of the program. Go is calling on financial and investment groups, employers, labor organizations, and retirement and pension institutions to submit recommendations on how to improve PERA and its incentives.

Growth data support push for wider adoption

Recent data indicate rising interest in the program as policymakers weigh revisions to its structure. Central bank figures show accumulated PERA contributions climb 45.3% year on year to P757.554 million as of end-June, from P521.363 million a year earlier.

Employee contributions account for the largest share of the total at 59.33%, after increasing 24.08% year on year to P449.45 million from P362.239 million. The number of PERA contributors also jumps to 30,055 from 6,193 in the same period last year, suggesting scope for further expansion if rules are simplified and incentives become more effective.

In our earlier coverage of planned Philippine sovereign bond reforms and expected index inclusion, we explained how these steps could broaden the investor base and improve liquidity, but would not automatically translate into stronger productive investment. We also noted that building a deeper domestic pool of long-term capital—through pensions, insurers, funds and households—alongside stronger governance and market infrastructure is crucial for capital-market modernization to benefit the wider economy.

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