How to save for your retirement: PERA Account

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All of us will grow old some day. It is inevitable. And we all look forward to enjoying the latter years of our lives, spending our free time with our loved ones. But are we prepared? If we’re no longer working, who’s going to look after our financial needs?

This is where PERA account comes in.

What is PERA account?

PERA or Personal Equity and Retirement Account is a voluntary savings available to all Filipinos with the goal of preparing for retirement.

Related: Investing in PERA account: How much can you earn?

It is officially established by the Republic Act No. 9505 of 2008. Through the Bangko Sentral ng Pilipinas (BSP), it was launched on December 16, 2016 and created the framework where citizens and institutions can come up with a way to voluntarily save for the purpose of using the funds upon reaching the retirement age. The law makes it possible for everyone to be able to save as early as they can. As a voluntary program, it can be done any time at any participating institutions.

PERA account investments

Bangko Sentral ng Pilipinas P.E.R.A. brochure.

So how does your money grow? If you start saving up, in what ways will it earn? You are actually given the choice on the type of investments. The only condition is that whatever you pick, it has to be approved by the regulatory authorities such as Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Insurance Commission, and other government agencies. Some of the selections you can make are the following:

For a general overview of what these accounts are, here’s a beginner’s guide to easy passive income in the Philippines.

How much earning can you expect from PERA account?

Earnings from the account varies depending on the choice of investments. As you know, different products have different returns. Also, take note that whenever you are investing into something that has potential for higher returns, there are usually higher risks involved. Similarly, modest risks usually means modest returns.

For example, government securities (debts that are incurred by the Philippine government) and bonds are relatively less risky compared to the volatile price movements of stocks of corporations like PLDT, Semirara, and Jollibee.

This also means that managed funds such as UITF or mutual fund follow the risk and return of the underlying assets it owns. So a UITF or mutual fund that holds government securities and bonds are less risky than the ones that hold stocks.

In other words, the earnings that you get from PERA account is non-guaranteed, and they change according to how and what assets the investments are allocated. You may open the following PERA investments offered in the market.

Who are eligible for PERA account?

  • at least 18 years of old
  • has source of income in the country or abroad
  • has tax identification number (TIN)
  • has a bank account
  • valid identification cards
  • latest income tax return (ITR)

If you are at least 18 years old, you are eligible to open a PERA account. Another condition is that you must be earning an income whether in or outside the country. Also, you must be a holder of tax identification number (TIN), which is fairly easy to acquire. Just drop by any branches of the Bureau of Internal Revenue or go online so it can be issued to you.

When can you get your money from PERA account?

How does it help you save up for your retirement? According to the rules, your money may only be released in the following scenarios.

  • at age 55 years old with at least 5 years of contribution
  • unexpected death, regardless of age or years of contribution

So the rules state that the only way for the assets to be disbursed is when you attain the age of 55 and after contributing for 5 years. Withdrawals are allowed within this period, but bear in mind that there will be charges that would lessen the amount that you’d end up receiving.

Also, when death occurs, then the account is going to be released no matter how old you are and the years that have been contributed.

In short, it is really designed to help you be financially ready at a stage in your life when you’re likely to be retired.

How much can you invest in PERA account?

  • Maximum: ₱100,000 per year for non-OFWs
  • Maximum: ₱200,000 per year for OFWs

According to the law, you can invest as much as ₱100,000 if you are employed locally. For overseas Filipino workers (OFW), their maximum contribution is twice that amount at ₱200,000.

You are allowed to invest more. However, any excess amount is not eligible for tax reliefs that the account provides to investors.

Benefits of PERA account

So what are the advantages of PERA account? There are three main benefits when opening a PERA account.

  • multiple accounts
  • tax benefits
  • employer contributions
  • excluded from asset or estate

Multiple accounts

You are allowed to open up to 5 PERA accounts under one administrator (to be explained below). Each one of them is exclusive to only one investment product.

Tax benefits

There are many tax benefits when you start an account. See the following examples.

  • 5% credit on your income taxes which can be used to pay for any income tax liabilities
  • tax exemption on 20% withholding tax on bank deposits, trust funds and deposit substitutes
  • tax exemption on 10% withholding tax on dividends
  • exempted on capital gains tax on any stocks
  • exempted on regular income tax on PERA products
  • tax-free withdrawals

Employer contributions

Your employer may opt to also contribute towards your retirement through the account. Their contribution is allowed up the maximum amount.

Excluded from asset or estate

But most important of all, your contributions are not going to be part of your asset or estate. This is very helpful during the times when there is a need to declare bankruptcy as debtors cannot claim any portion from PERA account.

It is also not included from estate taxes, which is good when you’re giving inheritance to your family.

How can you open a PERA account?

There are a few steps when opening the account. For the sake of clear discussion, they are broken down into several talking points. The funds fall under the following categories index funds, equities funds, bond funds, money market funds, and balanced funds.

Who can open PERA account?

Anyone who’s at least 18 years old can open an account and earning an income. If you choose BPI as your PERA administrator (explained below), they will require:

  • tax identification number (TIN)
  • proof of your TIN
  • BPI account
  • government-issued ID card
  • 1,000 pesos initial deposit

If you don’t have any TIN, drop by the nearest Bureau of Internal Revenue (BIR) office. Bring your birth certificate and valid ID. For proof of your TIN, you can use the BIR TIN card, income tax return, or any BIR-issued documents that show your TIN.

The BPI account is going to serve as your settlement account. Check with the bank on any of their savings accounts. Also, bring a government-issued ID card such as the one released by Social Security System (SSS), Professional Regulatory Commission (PRC), etc.

Lastly, bring at least 1,000 pesos for account opening.

PERA account for OFWs

For OFWs, there are two ways to open: by yourself or through your family. Just make sure that you prepare the following documents:

  • Overseas Employment Certificate (OEC) released by the Philippine Overseas Employment Administration (POEA)
  • proof that you would earn income abroad on the year of contribution

If you are an overseas Filipino worker based in another country, your family can open it on your behalf. For instance, your spouse or child can be your representative to get the account started in the country while you’re working abroad.

Prepare the following additional requirements:

  • marriage certificate (spouse)
  • birth certificate
  • sworn certification that authorize spouse/child opening the account on your behalf

Where can you open PERA account?

You need to have an administrator, which can be any bank or institutions. They are the ones who would do account management on your behalf such as opening the account, knowing your risk profile, reviewing investment options, checking on the terms, and other similar works.

For the moment, the Bank of the Philippine Islands (BPI) and Banco de Oro-Unibank (BDO) are the only companies that are PERA administrators.

What PERA funds can you invest?

To date, three banks are offering investment PERA funds: BDO, BPI, and Land Bank.


BDO has three PERA products that they started offering back in December 2016.

BDO PERA Short Term FundBDOMoney market
BDO PERA Bond Index FundBDOBonds
BDO PERA Equity Index FundBDOIndex fund


Bank of the Philippine Islands to date offers four P.E.R.A. products

BPI PERA Money Market FundBPIFixed income
BPI PERA Equity FundBPIEquities
BPI PERA Corporate Income FundBPIFixed income
BPI PERA Government FundBPIFixed income

Land Bank P.E.R.A.

Land Bank offers two peso-denominated and one dollar-denominated P.E.R.A. products. It’s still unclear when the company is going to make them available to the investing public.

Landbank PERA Money Market FundLandbankMoney market
Landbank PERA Bond FundLandbankBonds
Landbank PERA Global $ FundLandbankMoney market

What is a PERA custodian?

A custodian is a separate entity from the administrator. Its job is to hold all your assets, such as cash or securities, to be distributed to your chosen investment.

On account opening, your administrator will give you a list of custodian you can choose from.

What are PERA fees?

This is one of the drawbacks of the account. There are several companies that are involved. Because of this, there are administrator fee, custodian fee, and management fee. If you also hire an investment manager, they will also charge additional fee for their services.

All these actually add up and can lower your returns over the years.

Exit fee

The exit fee is charged when you fail to keep your money invested for at least 30 calendar days. All PERA products from BPI don’t have any holding period and therefore they don’t have this fee.

Management fee

The management fee represents a portion of the total value of the PERA fund that goes into paying its operations. It ranges between 0.20% to as high as 1.50% per year.

Custodian fee

The custodian fee is paid to the institution that takes care of the cash and securities assets of your investment. It must be a separate entity from the administrator.

Auditor fee

The auditor fee is paid to the company that checks the fund’s finances.

Investment manager fee

You are given the option to get an investment manager. S/He can help you decide to what assets you’re best invested in, and this fee goes to paying her or his services.

NameInitialAddHoldExitFeeCustodian feeAuditor fee
BDO PERA Short Term Fund 1,000.00 1,000.00 30 calendar days0.50%0.50%0.0431%
BDO PERA Bond Index Fund 1,000.00 1,000.00 30 calendar days1%1%0.0861%
BDO PERA Equity Index Fund 1,000.00 1,000.00 30 calendar days1%1%0.0857%
BPI PERA Money Market Fund 1,000.00 1,000.00 NoneNone0.50%2.0840%
BPI PERA Equity Fund 1,000.00 1,000.00 NoneNone1.50%0.07%1.5900%
BPI PERA Corporate Income Fund 1,000.00 1,000.00 NoneNone1.25%1.2800%
BPI PERA Government Fund 1,000.00 1,000.00 NoneNone1%1.1428%
Landbank PERA Money Market Fund 5,000.00 1,000.00 30 calendar days500 or 25% of earnings0.20%
Landbank PERA Bond Fund 5,000.00 1,000.00 30 calendar days500 or 25% of earnings1%
Landbank PERA Global $ Fund$200 $100 30 calendar days$10 or 25% of earnings1%