Bill to supplement retirement funds passed by Congress

THE bill that would supplement the retirement funds of all retiring public and private employes is expected to be ratified by Congress today (if it has not been last night) following its smooth approval in the bicameral conference committee early yesterday.

The Personal Equity and Retirement Account (PERA) will provide more options to public and private workers whose retirement plan is covered by the Government Service Insurance System or the Social Security System, said Sen. Edgardo Angara, chair of Senate committee on banks and financial institutions.

Under the PERA bill, an individual contributor may make a total maximum annual contribution of P100,000 to his PERA account. The contributor will be given an income tax credit equivalent to five percent of the total PERA contribution.

The contributor may open a special retirement account through accredited PERA-banks with a maximum deposit of P20,000, which should reach P100,000 in a span of one year and another P100,000 every year that follows. A married couple can open a joint account with an initial deposit of not more P40,000. The maximum monthly contribution to an account is limited to 10 percent for an individual and 15 percent for a married couple.

Income from the contribution as well as the eventual distribution of the PERA to the contributor will be tax-exempt. The amount will be due to the contributor when he or she reaches the age of 55.

"This is one of the best ways to accumulate savings. It will greatly augment Filipino's retirement plan. People are generally scared of retiring, especially Filipinos, because we are not savings-conscious and the pension we get from government - either SSS or GSIS - is usually inadequate for our sunset years," Angara said. "PERA will help retirees live more comfortably."

Sen. Manuel Roxas, author of the measure, said the bill when enacted into law would ensure financial stability and added opportunities for retirees. He said government must now begin educating employers, employes and financial institutions about PERA to maximize its benefits to the public.

According to the National Statistics Office, the country has a labor force of about 35.81 million. Of this, only 78 percent are members of government-initiated pension funds: 26.49 million for SSS and 1.4 million for GSIS. About 8 million have no pension or retirement savings plan. - Dennis Gadil