After 8 years, the law was executed and offered to the public through BDO Unibank and Bank of the Philippine Islands (BPI). They were the financial institutions that was authorized by the Bureau of Internal Revenue and Bangko Sentral ng Pilipinas in which interested individuals can pay their contributions.

What is PERA?

PERA is a voluntary investment and savings account similar to 401(k) and Roth IRA of the United States. This is designed as a financial tool that can be used for retirement. All Filipinos, whether employed or self-employed, residing in the country or working overseas can invest in PERA. The basic requirement is a verifiable income and Philippine Tax Identification Number.

The basic contribution for those who reside in the Philippines is Php100,000 annually. While, Php200,000 is the maximum contribution for overseas workers.

PERA serves as an additional source during retirement, aside from other pension benefits granted by GSIS or SSS.

Things to consider when investing in PERA

The first thing to do if you will invest in PERA is to select an administrator to oversee your account. You can choose either BPI or BDO.

Next, you need to pick the type of investment and a custodian. The custodian will be responsible to receive your contribution and put it to your chosen investment.  You can invest in maximum of 5 products, provided that the total amount is within the basic investment for a year.

PERA benefits and terms

The contributions you’ve made in your account is your investment. You can choose from various investment products such as stocks, pooled funds, annuity contracts, bonds, mutual funds, and many others.

Investing your money with PERA is more profitable as compared to keeping it in a bank savings account. You can also enjoy the privilege of income tax credit from the 5% of the total PERA contribution. In the same manner, OFWs who were investing in PERA can claim for tax credit such as real estate property tax in the Philippines.

Read also: Business Ideas with Small Capital or Low Investment

The good thing is that your income earned from your account tax exempted provided that you’ll withdraw it as you reach 55 years old or later. If the investor died before reaching 55, the money in the PERA account will be forwarded to the heir without any probate.

However, in case of account termination before reaching 55, the investor will be charged for penalty fee of 20% of the total income of the PERA account. If the money will be used for hospitalization, the investor can withdraw money without penalty.

The post PERA Law – How to Invest in PERA Personal Equity Retirement Account appeared first on Pinoy Business Ideas.