13TH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
Second Regular Session 
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Prepared by the Committee on Banks, Financial Institutions and Currencies, 
in substitution of Senate Bill Nos. 1343, 1747, 1821 and 1985 
AN ACT 
ESTABLISHING A PROVIDENT PERSONAL SAVINGS PLAN, KNOWN AS 
THE PERSONAL EQUITY AND RETIREMENT ACCOUNT ("PERA") 
Be it enacted by the Senate and the House of Representatives of the 
Section 1. Title.- This Act shall be known as the "Personal Equity and 
Philippines in Congress assembled: 
Retirement Account (PERA) Act of 2005." 
Section 2. 
Declaration of Policy. - It is declared the policy of the 
State to promote capital market development and savings mobilization by 
establishing a legal and regulatory framework of retirement plans for persons, 
comprised of voluntary personal savings and investments. The State recognizes 
the potential contribution of PERA to long-term fiscal sustainability through the 
provision of long-term financing and reduction of social pension benefits. 
Section 3. Definition of Terms. - Unless the context requires 
otherwise, the following terms shall have the following significance as used in 
this Act: 
a. 
"Administrator" is an entity accredited by the Bureau of Internal 
Revenue (BIR), after pre-qualification by the concerned Regulatory Authority. 
The Administrator shall be responsible for overseeing the PEW, whose core 
functions shall include, but not limited to: reporting on contributions made to 


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the account, computing the values of investments, educating the Contributor, 
enforcing PEW contributions and withdrawal limits, collecting appropriate taxes 
and penalties for the government, issuing BIR Income Tax Credit Certificates to 
the Contributor, consolidating reports on all investments, income, expenses and 
withdrawals on the account and ensuring that PERA contributions are invested in 
accordance with the prudential guidelines set by the Regulatory Authorities. 
b. 
"Contributor" is any person of legal age who is a duly registered 
taxpayer. The Contributor establishes and makes contributions to a PEW. 
C. 
"Custodian" is a separate and distinct entity unrelated to the 
Administrator, accredited by the Bangko Sentral ng Pilipinas, providing services 
in connection with the custodianship of funds and securities comprising the PEW 
investments. 
The Custodian shall be responsible for receiving all funds in 
connection with the PERA, maintaining custody of all original securities, evidence 
of deposits or other evidence 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 PEW. 
d. 
"Early withdrawal" shall pertain to any withdrawal prior to the 
period of distribution as set forth under Section 12 hereof. 
e. 
"Investment Manager" is a regulated person or entity authorized by 
a contributor to make investment decisions for his PEW. As such, it shall 
assume fiduciary duty and responsibility for PEW investments. An Investment 
Manager shall act with utmost fidelity by observing policies directed towards 
confidentiality, scrupulous care, safety and prudent management of PERA funds. 
An Administrator may also act as an Investment Manager. 
f. 
"Personal Equity Retirement Account (PERA)" 
refers to the 
voluntary retirement account established by and for the exclusive use and 


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benefit of the Contributor for the purpose of being invested solely in PERA 
investment products in the Philippines. The Contributor shall retain the 
ownership, whether legal or beneficial, of funds placed therein, including all 
earnings of such funds. 
9. 
"PEW Investment Product" refers to a unit investment trust fund, 
mutual fund, annuity contract, insurance pension products, pre-need pension 
plan, shares of stock listed in exchange, exchange-traded bonds or any other 
investment product or outlet which the concerned Regulatory Authority may 
allow for PEW purposes. 
The concerned Regulatory Authority must first approve the product before 
being granted tax-exempt privileges by the BIR. 
h. 
"Regulatory Authority" refers to the Bangko Sentral ng Pilipinas 
("BSP") as regards banks, other supervised financial institutions and 
trust 
entities, the Securities and Exchange Commission ("SEC") 
for investment 
companies, investment houses, stockbrokerages and pre-need plan companies, 
and the Office of the Insurance Commissioner ("OK") for insurance companies. 
Section 4. Establishment of a PERA - A  Contributor. 
may create and maintain a maximum of five (5) PERA, at any one time, 
provided that the Contributor shall designate and maintain only 
one 
Administrator for all his PEW. 
The Contributor shall make all investment decisions pertaining to his 
PEW. However, he has the option of appointing an Investment Manager, either 
in writing or in electronic form, to make investment decisions on his behalf 
without prior consultation. 


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Section 5. Maximum Annual PERA Contributions - A Contributor 
may make an aggregate maximum contribution of Fifty Thousand Pesos 
(P50,OOO.OO) 
to his/her PERA per year; provided that if the Contributor is 
married, each of the spouses shall be entitled to make a maximum contribution 
of Fifty Thousand Pesos (P50,OOO.OO) per year to his/her respective PERA. The 
Secretary of Finance may adjust the maximum contribution from time to time, 
taking into consideration the present value of the said maximum contribution 
using the Consumer Price Index as published by the National Statistics Office, 
fiscal position of the government and other pertinent factors. 
Section 6. Employer‘s Contribution - A private employer may 
contribute to its employee’s PERA to the extent of the amount allowable to the 
Contributor; Provided, however, that the employer complies with the mandatory 
Social Security System (SSS) contribution and retirement pay under the Labor 
Code of the Philippines. Such contribution shall be allowed as a deduction from 
the employer’s gross income, but shall be treated as part of the employee’s 
compensation for tax purposes. 
The Contributor, however, retains the 
prerogative to make investment decisions pertaining to his PERA. 
Section 7. Separate Asset - The PERA shall be kept separate from 
the other assets of an Administrator/Custodian and shall not be part of the 
general assets of the Administrator/Custodian for purposes of insolvency. 
Section 8. Tax Treatment of Contributions - The Contributor shall 
be given an income tax credit equivalent to five percent (5%) of the total PERA 
contribution; Provided, however, that in no instance can there be any refund of 
the said tax credit arising from the PERA contributions. 


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Section9. Tax Treatment of Investment Income - All income 
earned by a PERA is tax exempt. 
Section 10. Tax Treatment of Distributions - All 
distributions in 
accordance with Section 12 hereof are tax exempt. 
Section 11. Termination - Any premature termination shall be treated 
as an Early Withdrawal under Section 13 hereof, provided that the penalties 
thereunder shall not apply if the entire proceeds therefrom are immediately 
transferred to another PEW investment and/or another Administrator. 
Section 12. Distributions Upon Retirement/Death- Distributions 
may be made upon reaching the age of fifty-five (55) years, provided that the 
Contributor has made contributions to the PERA for at least five (5) years. The 
distribution shall be made in either lump sum or pension for a definite period or 
lifetime pension, the choice of which shall be at the option of the Contributor. 
The Contributor, however, has the option to continue the PERA. 
Complete 
distribution shall be made upon the death of the Contributor, irrespective of the 
age of the Contributor at the time of his death. 
Section 13. Penalty on Early Withdrawal - Any Early Withdrawal 
shall be subject to a penalty, the amount of which would be determined by the 
Secretary of Finance and payable to the Government; provided that the amount 
of the penalty shall in no case be less than the tax incentives enjoyed by the 
Contributor. 


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No early withdrawal penalty shall be imposed on any withdrawal of any 
funds for the following purposes: 
a. For payment of accident or illness-related hospitalization in excess of 30 
days; and 
b. For payment to a Contributor who has been subsequently rendered 
permanently totally disabled as 
defined 
under the 
Employees 
Compensation Law, Social Security Law and Government Service 
Insurance System Law. 
Section 14. Non-Assignability - No portion of the assets of a PEW 
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 15. Rules and Regulations - Consistent with the policy of 
promoting transparency in PEW investment and thereby affording protection to 
the Contributor, the Department of Finance and the concerned Regulatory 
Authorities, with the Bangko Sentral ng Pilipinas as lead agency, shall coordinate 
to establish uniform rules and regulations pertaining to the following subject 
matters: 
a. Qualification and disqualification standards for Administrators, Custodians 
and Investment Managers, including directors and officers thereof; 
b. Qualified and/or eligible PERA investment products; 
c. Disclosure requirements on the terms and conditions of the PERA 
investments; 
d. Minimum requirements imposed on the Administrators as regards 
inculcating financial literacy in investors; 


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e. Ascertainment of client suitability for PERA products; 
f. Record-keeping, reporting and audit requirement ,of Administrators and 
Custodians pertaining to records for all contributions, earnings and total 
account balances; and 
g. Other pertinent matters to be determined by the Regulatory Authorities. 
Section 16. Administration of Tax Incentives - The BIR shall issue 
the implementing rules and regulations regarding all aspects of tax 
administration relating to PEW. 
The BIR shall coordinate the qualification 
standards of the Administrator with the Regulatory Authorities. 
Section 17. Penalty - 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) months nor more than two (2) 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 or Investment Manager 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, or invest the contribution in contravention 
of the instructions of the Contributor,; 
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; 


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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 or Investment Manager of 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, Custodian or Investment Manager may be 
subject to the administrative sanctions provided for in applicable laws. 
The above penalties shall be without prejudice to whatever civil and 
criminal liability provided for under applicable laws for the same act or omission. 
Section 18. Abuse of the Tax Exemption And Privileges - Any 
person, natural or juridical, who unduly avails of the tax exemption privileges 
herein granted, possibly by co-mingling PEW accounts in an investment with 
other investments, when such person is not entitled hereto, shall be subject to 
the penalties provided in Sec. 17 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 per cent (12%) per year from the 
date of enjoyment of the tax exemptions and privileges to the date of actual 
payment. 
Section 19. Separability Clause - If any provision or part hereof, is 
held invalid or unconstitutional, the remainder of the law or the provision not 
otherwise affected shall remain valid and subsisting. 
Section 20. Repealing Clause - All laws, decrees, orders, rules and 
regulations or parts thereof, inconsistent with this Act are hereby amended or 
modified accordingly. 


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Section 21. Effectivity. This Act shall take effect 15 days following its 
publication in a newspaper of general circulation.