FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
SENATE 
Introduced by Senator JUAN MIGUEL F. ZUBlRl 
EXPLANATORY NOTE 
Most people look fotward to retirement as a moment when they will finally be 
able to relax and enjoy the pleasure of having more time for themselves and their 
families, away from the pressures of daily work. But without a dependable retirement 
plan, they are not assured of a comfortable and leisurely retirement. 
The absence of retirement funds or savings is a critical but underreported 
national problem. Indeed, the government is called upon and obliged to develop in the 
Filipino people sufficient awareness and understanding on the importance of savings 
and the necessity that everyone starts the habit of saving as soon as possible. Sans 
savings, people will not enjoy the remaining years of their lives due to the uncertainties 
and insecurities that will plague them. It is always best to save and plan, to lay the 
groundwork at the earliest time possible, for the future. Indeed, there is no substitute for 
preparedness for the foreseeable and unforeseeable events that will come along. 
This proposed measure seeks to introduce the Personal Equity and Retirement 
Account (PERA) which we hope will be accepted as an essential and valuable tool in 
encouraging savings for our people’s retirement years. 
A PERA is a savings plan to achieve a comfortable and financially-secure 
retirement through a sound investment and planning scheme. Through a PERA, one is 
encouraged to save because certain contributions to the savings funds are deductible 
from the taxable income, and earnings of said savings are sheltered from taxation as 
they know and are taxed only upon their withdrawal from PERA. 
A PERA is likewise a flexible investment scheme. In case of an emergency, one 
can take out or withdraw his money or a portion of his savings from the PERA with a 
minimum inconvenience. It is unlike a pension scheme wherein one’s money is locked 
in and rendered practically inaccessible for immediate and un-programmed needs. 
PERA has likewise been designed to benefit a good part of our working populace 
who are neither members of government insurance funds and who have very limited 
options. 


The PERA is a dynamic investment scheme. It can offer facilities to move funds 
to high levels and take advantage of prevailing market conditions. Investors will also be 
able to keep track of their funds and even directly manage their PERAs as an 
investment portfolio since PERA investors can always choose suitable arrangements in 
accordance with their present economic status and future financial objectives. 
In view of the above premises and in order to reverse the long course of neglect 
on very vital retirement issues, approval of this bill is earnestly sought. 
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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
S. No. 
Introduced by Senator JUAN MIGUEL F. ZUBlRl 
AN ACT 
ESTABLISHING A PROVIDENT PERSONAL SAVINGS PLAN KNOWN AS THE 
“PERSONAL EQUITY AND RETIREMENT ACCOUNT” 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
SECTION I .  Title. - This Act shall be known as the “Personal Equity and Retirement 
Account (PERA)”. 
SECTION 2. Declaration of Policies. - It is declared the policy of the State to promote 
capital market development and savings mobilization by establishing the legal and 
regulatory framework of retirement plans for persons, comprised of voluntary personal 
savings and investments that are supported by government incentives. For this 
purpose, the State shall rationalize the functions of the Regulatory Authorities with the 
main objective of generating investments and accelerating saving mobilization by 
providing tax incentives to eligible PERA Investment Vehicles. 
SECTION 3. Definition of Terms. - As used in this Act, the following terms shall have 
the following significance, unless the context provides otherwise: 
a) “Administrator” is an entity accredited by the Bureau of Internal Revenue (BIR), 
after pre-qualification by the Bangko Sentral ng Pilipinas (BSP), in the case of 
financial services institutions with trust licenses; or by the Securities and 
Exchange Commission (SEC), in the case of investment companies, investment 
houses, stockbrokerages and pre-need plan companies; or by the Office of the 
Insurance Commissioner (OIC), in the case of life insurance companies. The 
Administrator shall assume fiduciary responsibility over PERA funds. Its 
functions shall include but not limited to: reporting on contributions made to the 
account; computing the values of investments; educating the Contributor; 
enforcing PERA contributions with withdrawal limits; acting as withholding agent 


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in the collection of appropriate taxes and penalties; issuing certificates of 
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contribution for BIR purposes; and consolidating reports on all investments, 
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income, expenses, withdrawals on the account and ensuring that PERA 
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contributions are invested only in permitted investment as required by the 
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concerned Regulatory Authority; 
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b) “Contributor” is a citizen of the Philippines, of legal age, who possesses a 
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Taxpayer Identification Number (TIN), and who establishes and makes 
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contributions to a PERA; 
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d) “Investment Manager” is an Administrator additionally authorized by a 
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Contributor to make investment decisions for his PERA. As such, it shall assume 
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fiduciary duty and responsibility for PERA investments. It shall act with utmost 
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fidelity by observing policies directed towards confidentiality, scrupulous care, 
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safety and prudent management of PERA funds; 
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e) “Personal Equity Retirement Account (P€RA)” refers to the voluntary retirement 
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account established by and for the exclusive use and benefit of the Contributor 
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who shall retain the ownership of funds placed therein, including all earnings of 
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such funds; 
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9 “P€RA lnvestment Vehicle” refers to a common trust fund, mutual fund, annuity 
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contract or pre-need pension plan, dedicated solely for P E W  purpose and which 
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has been pre-approved by the concerned Regulatory Authority before being 
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granted tax-exempt privileges by the BIR: Provided, That the concerned 
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Regulatory Authority may allow other PERA pooled investment vehicles under 
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the rules, subject to the approval of the Secretary of Finance; 
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g) “lnvestment Vehicle Provider” refers to an entity authorized by any of the 
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c) “Custodian” is a financial services institution with trust licenses or an insurance 
company, separate and distinct from the Administrator, accredited by the BIR 
after pre-qualification by the concerned Regulatory Authority, providing services 
in connection with custodianship of funds and securities of the PERA funds and 
assets. It shall receive and disburse all funds in connection with the PERA, 
maintaining custody of all original- securities, evidences of deposits or other 
evidences of investment. The Custodian shall operate independently from the 
Administrator. The Custodian is required to report to the Contributor and the 
concerned Regulatory Authority at regular intervals, all financial transactions and 
all documents in its custody under a PERA; 
Regulatory Authorities to offer and manage a PERA Investment Vehicle; 
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h) “Self-Direcfed PERA Account” refers to a PERA in which the investment 
decisions are made by the Contributor; 
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“Regulatory Authority” refers to the BSP as regards financial services institutions 
or trust companies, the SEC for investment companies, investment houses, 
stock brokerages and pre-need plan companies, the OIC for life insurance 
companies, and the BIR as appropriate. 
SECTION 4. Establishment of a PERA. - A contributor who establishes a PERA shall 
designate an Administrator. The Contributor may also designate an Investment 
Manager and a Custodian but has the option to ask the Administrator to choose the 
latter on his behalf. 
The Contributor may transfer from one Administrator to another at any time: 
Provided, That a Contributor must only have one Administrator at any given time. 
SECTION 5. lnvesfmenf Decisions. - Generally, the Contributor shall make all 
investment decisions. However, he may authorize an Investment Manager, either in 
writing or electronic form, to make all investment decisions on his behalf without prior 
consultation. 
SECTION 6. Fit and Proper Rule for Officers and Directors of Administrator, Investment 
Managers, Custodians and lnvesfmenf Vehicle Providers. - The concerned Regulatory 
Authorities shall coordinate to establish uniform, fit and proper standards for 
Administrators, Custodians, Investment Managers and Investment Vehicle Providers. 
This common regulatory framework shall maintain the quality of management in these 
institutions and afford better protection to the Contributors. Regulatory Authorities shall 
prescribe the qualification and disqualification standards of individuals elected or 
appointed as directors or officers of Administrators, Custodians, Investment Managers 
and Investment Vehicle Providers. 
In determining whether an individual is fit and proper to hold the position of a 
director or officer of an Administrator, Custodian, Investment Managers and Investment 
Vehicle Provider, regard shall be given to his integrity, experience, education, diligence, 
training and competence. 
SECTION 7. Maximum Fees. - An accredited Administrator, Custodian, or Investment 
Manager for a PERA account shall charge fees not to exceed the amount or 
percentage to be determined by the concerned PERA Regulatory Authority. 
SECTION 8. PERA lnvestment Vehicles. - A Contributor, through his Administrator, 
shall invest only in any of the following tax-favored PERA Investment Vehicles: 
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a. Approved common trust funds and mutual funds registered in the Philippines; 
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b. Approved annuity contracts and pre-need pension plans; and 
c. Other investment vehicles which the concerned Regulatory Authority may by 
rule allow subject to the approval of the Secretary of Finance. 
SECTION 9. Permitted Investment of PERA lnvestment Vehicles. - investments made 
by Contributors in any of the products listed in Section 8 and earnings thereon shall be 
invested only in the following investments, subject to full disclosure standards and 
investments limits set by the concerned Regulatory Authority: 
a. National government securities or issues guaranteed by the Philippine 
government; 
b. Corporate or government bonds, including issues of local governments or 
government agencies, or debt instrument including asset-backed securities, 
which are rated by a recognized rating agency in the Philippines; 
c. Bank deposits in local and foreign currencies in Philippine financial 
institutions; 
d. Foreign currency denominated investments authorized by the BSP, including 
the currencies themselves, traded on any recognized exchange but not to 
exceed 7.5% or whatever is the current Social Security System (SSS) limit on 
foreign denominated investments, for the aggregate PERA assets held by the 
Administrator; 
e. Non-speculative equities listed in the Philippine Stock Exchange (PSE); and 
f. Other investment outlets which the concerned Regulatory Authority may by 
rule allow subject to the approval of the Secretary of Finance. 
SECTION IO. Basic lnvestment Vehicles. - Regulatory Authorities may designate basic 
PERA Investment Vehicles that will be commonly offered by all Administrators to 
provide simple-to-understand options for Contributions. 
SECTION 11. Maximum Annual E R A  Contributions. - A Contributor may make a 
contribution of no more than Fifty Thousand Pesos (P50,OOO.OO) per year. The 
maximum contribution may be adjusted from time to time to such amount that the 
Secretary of Finance may determine. 
SECTION 12. Tax Treatment of Contributions. - The annual PERA contribution to the 
extent of the Fifty Thousand Pesos (P50,OOO.OO) shall be excluded from the gross 
income of the Contributor and shall be exempt from income taxation: Provided 
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however, That this tax treatment shall be applicable only to contributions taken from the 
Contributor’s taxable income other than those subject to a final tax, as defined under 
the National Internal Revenue Code, as amended. 
SECTION 13. Tax Treatment of Investment Income, - All investment income derived by 
BIR-approved P E W  Investment Vehicles are exempt from income tax. 
SECTION 14. Tax Treatment of Distributions. - All distributions from the PERA under 
Section 18 are tax-exempt. 
SECTION 15. Penalty on Early Withdrawal. - No early withdrawal may be made until 
contributions have been made for at least five (5) years. Early withdrawal penalties 
which shall be payable to the Government as may be determined by the Secretary of 
Finance shall be imposed on any withdrawal of any funds for the following purposes: 
a. For payment of hospitalization in excess of thirty (30) days; 
b. For payment to a Contributor who has been subsequently rendered 
permanently disabled as defined under the Labor Code of the Philippines, 
Republic Act No. 7641, the Social Security Law, and Government Service 
Insurance System Law; and 
c. For the purchase of the first family socialized housing unit of the Contributor. 
However, no penalties shall be imposed on distributions made in the event that 
the Contributor reaches the age of fifty (50) years or upon his or her death. 
SECTION 16. Employer‘s Contribution. - An employer may make contributions to its 
employee’s PERA, and such shall be allowed as a deduction from the employer’s gross 
income: Provided, That the employer complies with the mandatory SSS contribution 
and retirement pay under the Labor Code of the Philippines: Provided further, That the 
amount thereof plus the employee’s contribution shall not exceed the maximum amount 
allowable under Section 11 hereof. 
SECTION 17. Records, Reporting and Audit, - The Administrators, Custodians, 
Investment Managers and Investment Vehicle Providers shall, as applicable, keep 
records for all contributions, earnings and total account balances and shall be required 
to report to the Contributor these amounts on a quarterly basis for each calendar year. 
Such records shall be made available for inspection by the Regulatory Authority during 
office hours. The Regulatory Authority concerned may conduct routine and cause 
audits of Administrators, Custodians, Investment Managers and Investment Vehicle 
Providers. 
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SECTION 18. Distributions Upon Retirement. - Distributions shall be made upon 
reaching the age of fifty (50) years provided that contributions have been made to the 
PERA for at least five (5) years. The distribution shall be made in any mode that may 
be elected by the Contributor. The Contributor then has the option to continue on with 
the account. In the event that a Contributor opens an account at the age of fifty-six (56) 
and above, distribution shall be made at any time without the corresponding five (5)- 
year holding period nor penalties. 
SECTION 19. Non-AssignaMity. - No portion of the assets of a P E W  may be 
assigned, alienated, pledged, encumbered, attached, garnished, seized or levied upon. 
PERA assets shall not be considered assets of the Contributor for purposes of 
insolvency and estate taxes. 
SECTION 20. Pendfy. - A fine of not less than Fifty Thousand Pesos (P50,OOO.OO) nor 
more than Two Hundred Thousand Pesos (P200,OOO.OO) or imprisonment for not less 
than six (6) years nor more than twenty-one (21) years or both such fine and 
imprisonment, at the discretion of the court, shall be imposed upon any person, 
association, partnership or corporation, its officer, employee or agent, who shall: 
a. Act as Administrator, Custodian, Investment Manager or Investment Vehicle 
Provider without being properly qualified or without being granted prior 
accreditation by the concerned Regulatory Authority; 
b. Invest the contribution without written or electronically authenticated authority 
from the Contributor except in the case of Self-Directed Accounts; 
c. Knowingly and willfully make any statement in any application, report or 
document required to be filed under this Act, which statement is false or 
misleading with respect to any material fact; and 
d. Violate any provision of this Act or rules and regulations issued pursuant to 
this Act. 
Notwithstanding the foregoing, any willful violation by the accredited 
Administrator, Custodian, Investment Manager or Investment Vehicle Provider for any 
of the provisions of this Act, or its implementing rules and regulations, or other terms 
and conditions of the authority to act as Administrator may be subject to the 
administrative sanctions provided for in applicable laws. 
SECTION 21. Abuse of Tax Exemptions and Privileges. - Any person, natural or 
juridical, who unduly avails of the tax exemption privileges herein granted, or who 
willfully aids or abets in the commission of the same, possibly by co-mingling PERA 
accounts in an investment with other investments, when such person is not entitled 
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hereto, shall be subject to the penalties provided in Section 20 hereof. In addition, the 
offender shall refund to the government double the amount of the tax exemptions and 
privileges enjoyed under this Act, plus interest of twelve percent (12%) per year from 
the date of enjoyment of the tax exemptions and privileges to the date of actual 
payment. 
SECTION 22. lmplementing Rules and Regulations. - The Regulatory Authorities, 
together with the BIR, shall promulgate and amend such rules and regulations as may 
be necessary or appropriate to implement the provisions of this Act. Within thirty (30) 
days after the promulgation of the implementing rules and regulations or their 
amendments, the same shall be submitted to the Congressional Oversight Committee, 
hereinafter created, for approval. 
SECTION 23. Congressional Oversight Committee. - There is hereby created a 
Congressional Oversight Committee composed of seven (7) members from the Senate 
and seven (7) members from the House of Representatives. The members from the 
Senate shall be appointed by the Senate President with at least two (2) Senators 
representing the Minority. The members from the House of Representatives shall also 
be appointed by the Speaker with at least two (2) Representatives representing the 
Minority. 
The Congressional Oversight Committee shall have the power to oversee the 
implementation of this Act and approve such rules and regulations promulgated 
pursuant to Section 22 hereof. It shall also have the power to promulgate its own rules. 
SECTION 24. Repealing Clause. - All laws, decrees, order, rules and regulations or 
parts thereof, inconsistent with this Act are hereby repealed, amended or modified 
accordingly. 
SECTION 25. Separability Clause. - If any provision or part hereof, is held invalid or 
unconstitutional, the remainder of the law or the provision not othetwise affected shall 
remain valid and subsisting. 
SECTION 26. Effectivity. - This Act shall take effect 15 days following its publication in 
the Official Gazette and in a newspaper of general circulation. 
Approved, 
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