The central bank urged the Filipinos to take advantage of unused; law to fatten their pension plans, noting that Philippines citizens were among the regions poorest prepared for the financial retirement challenges. Speaking at the launch of the digital Personal Equity andRetirement Accounts(Pera) initiative online, Bangko Sentral ng Pilipinas Governor Benjamin Dioknosaid the legislation has so far struggled to build up a critical mass of investors as its authors envisaged.
Money is actually underused, “he said in his address, noting that as of the end of July 2020 only 1,586
Filipinos had taken advantage of the program, with total contributions amounting to a mere P137million. “The Pera industry hasn’t gained any major traction since its launch in December 2016. Of the total contributors, 1,099 or 69 percent are working locally, 273 or 17 percent are Filipino employees from overseas, and 214 or 14 percent are self-employed. OFWs have higher contributions on average atP110,000; local staff, P82,000, and the self-employed, P76,000.
Unfortunately, those figures remain poor. The Philippines has about 7.6 million Filipinos aged 60 years and above, according to the latest estimate from the Philippine Statistics Authority ( PSA). Just 20 percent of this category is compensated by either SSS or GSIS, leaving 80 percent of senior citizens with no compulsory pension at all.
Retirees who are lucky enough to be compensated by state-sponsored retirement programs earn an average monthly SSS pension of P5,123 and a GSIS pension of P18,525. Depending on the lifestyle you want in your senior years, this pension may or may not be enough to satisfy all your needs, " said the chief of the central bank, adding that surveys also showed that Filipinos do not want to plan for their own retirement in
PSA recorded that the gross domestic product share of social security benefits —including pensions for retirement and survivorship, illness, injury, death, and other associated payments has remained relatively low at about 2 percent from 2012 to 2017. The launch on Tuesday would allow Filipinos to make pension plan investments through their mobile phones, with the digitization process enabling
Pera-accredited banks and financial institutions to provide more investors with easy and accessible retirement saving products through more efficient networks.
Under Pera, contributions within a calendar year, up to a limit of P100,000 for local residents orP200,000 for Filipino expatriates, shall be entitled to a 5 percent tax credit that may be used against income tax liabilities or, in the case of Filipino overseas employees, any national internal income tax liabilities. Investment income from investments in Pera is also exempted from tax.
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