FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
) 
S E N A T E  
S. NO. ,1194 
IWRODUCED BY THE HONORABLE MAR ROXAS 
EXPLANATORY NOTE 
This bill seeks to introduce the Personal Retirement Account (PERA) which is an 
essential and valuable tool in encouraging savings for our people’s retirement years. Through 
a PERA, one is encouraged to save because certain contributions to the savings funds are 
deductible from the tax income, and earnings of the said savings are sheltered from taxation 
as they grow and are taxed only upon their withdrawal from PERA. It has been designed to 
benefit a good part of our working populace who are neither member of government 
insurance funds and who have very limited options. 
Most people look forward to retirement ils 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 depefidable retirement plan, they are not 
assured of being able to enjoy comfortable and leisurely retirement years. 
The absence of retirement funds or savings is a critical but underreported national 
problem. For the year 2004, approximately 26 million Filipinos were mefibers of the Social 
Security System, 5.6 million were covered by the Pag-Ibig Fund and 1.4 million were 
covered by the Government Service Insurance Funds administered by the Government 
Service Insurance System (GSIS). In other words, only about 33 million or two-fifths of the 
Philippine population have some kind of a retirement plan. 
Indeed, the government is called upon and obligated to develop in the Filipino people 
sufficient awareness and understanding of the importance of savings and the necessity to 
start 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. 
This proposed measure seeks to introduce the Personal Retirement Account (PERA) 
which we hope will be accepted as an essential and valuable tdol in encouraging savings for 
our people’s retirement years. It has been designed to benefit a good part of our working 
populace who are neither member of government insurance funds and who have very 
limited options. 
A PERA is a savings plan to achieve a comfortable and financially secure retirement 
through a sound investment and planning scheme. The PERA is a flexible investment 


scheme because one can withdraw his money or a portion of his savings from the PERA with 
minimal inconvenience in case of an emergency. The PERA is likewise a dynamic 
investment scheme because it offers facilities to move funds to high levels and take 
advantage of prevailing market conditions. 
Through a PERA, one is encouraged to save because certain contributions to the 
savings funds are deductible from the tax income, and earnings of the said savings are 
sheltered from taxation as they grow and are taxed only upon their withdrawal from PERA 
In view of the foregoing, approval of this bill is earnestly sought, 


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FOURTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
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INTRODUCED BY THE HONORABLE MAR R O U S  
AN ACT 
ESTABLISHING A PROVIDENT PERSONAL SAVINGS PLAN KNOWN AS THE 
“PERSONAL EQUITY AND RETIREMENT ACCOUNT” 
Be it enacted by the Senate and rhe House of Representatives of the Philippines in Congress 
Assem bled: 
SECTION 1. EtJe. - This Act shall be known as the “Personal Equity and Retirement 
Account (PERA) Act of 2007.” 
SEC. 2. 
Declaration of Policies. - It is the policy of the State to promote and 
encourage individual and personal savings, investments and retirement plans supported by 
government incentives. 
SEC. 3. 
Definition of Terms. - As used in this Act, unless the context otherwise 
requires, the following terms shall have the following significance: 
a. “Retirement Account” or the “Tmst” refers to the trust created or organized by an 
individual, known as “trustor,” for his exclusive use and benefit upon and duiing 
his retirement, in which said trustor retains only the equitable ownership of the 
funds he deposits therein as savings, as well the income thereof from investments 
of said fund; 


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b. “Trustee” is a bank accredited by the Bangko Sentral ng Pilipinas (BSP) designated 
by the trustor to administer and manage the retirement account and hold legal 
title to the trust until the retirement of the trustor or the termination of the trust 
as provided in this Act; 
c. “Tmsto? is the contributor or depositor to the fund creating or organizing a 
retirement account, as well as the funds annually or regularly increasing and 
augmenting the deposited capital as authorized under this Act; 
d. “ Yea?‘ means every taxable year under the National Internal Revenue Code; 
e. ‘Notify” means to send notice in writing: 
f. “Portfolio” refers to the record or list of investments made by the trustee for and 
in behalf of the trustor; 
“Tm” refers to the income tax as defined under the National Internal Revenue 
Code: 
h. “Penalty” means the sum to be paid by the individual contributor for early 
withdrawals of any part of the account held by the trustee-bank; 
“Tax Code”means the National Internal Revenue Code: and 
g. 
i. 
j. “Beneficiaries” mean all the heirs and assigns who shall succeed to all the rights, 
under the law, acquired by the contributor in and through his retirement account. 
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Thousand Pesos (P20,OOO.OO). 
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SEC. 4. 
Opening of Retirement Account. - An individual person of legal age may 
create, organize or open a retirement account with a trustee, or a bank accredited by the 
Bangko Sentral ng Pilipinas, with an initial deposit or contribution of not more than Twenty 
A married couple may create, organize or open a joint retirement account with an 
No individual or 
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initial deposit of not more than Forty Thousand Pesos (P40,OOO.OO). 
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married couple may open a retirement account with an amount more than'what is required 
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under this Act. 
SEC. 5. QuaIieing Investment Rules. - Funds deposited in a retirement account shall 
be qualified for investments only in the following: 
a. government securities 
b. securities including ordinary shares of stocks, not being shares in an investment 
trust, issued by a company which is incorporated in the Philippines and quoted in 
the official list of a recognized stock exchange in the Philippines or dealt in on the 
unlisted securities market; or 
c. cash which the trustee is entitled to hold for investment under the rules of the 
account; or 
d. other investments that may be considered non-speculative. 
SEC. 6. 
General I)lvestment Rules. - Investment of funds held in the retiremeqt 
account shall observe the following rules: 
a. All transactions, whether by way of sale, purchase or otherwise, handled by either 
the trustor himself or the trustee-bank, shall be made at the price which those 
investments might reasonably be expected to fetch in the open market; 
b. Investments made by a trustor shall be supervised by the trustee; 
c. A trustor's cash contribution and any other cash by way of interest, income and 
others held by the trustee shall be held in pesos and other legal tender in the 
Philippines and deposited in the account of the trustor; 
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d. The trustee shall account for any amount representing income, penalties and taxes 
applicable on the contribution of the trustor in accordance with the provisions of 
this Act and the Tax Code; 
e. Investments may be made only by way of cash or shares of stocks; 
f. An investment portfolio shall be presented to the trustor by the trustee whenever 
necessary; 
g. No part of the trust fund shall be invested in life insurance contracts; 
h. The trustee shall notify the trustor of every investment made and income earned 
on the latter’s behalf. 
SEC. 7. Maximum Annual Contributions - The maximum annual contribution or 
deposit for the establishment of a retirement account shall in no case exceed 10% of the 
monthly gross wage in the case of an individual trustor or 15% in the case of a married 
couple. The maximum contribution may be adjusted from time to time to such amount that 
the Secretary of Finance may determine. 
SEC. 8. Income Tax Deductibi3t.y - The contributions made per taxable year shall 
be One Hundred Percent (100%) deductible from the taxable income if they fall within any 
of the following qualifications: 
a. An individual member or any or both of the working spouses are not covered by 
an employer-sponsored retirement; 
b. Both spouses are covered by an employer-sponsored retirement plan, but their 
joint adjusted gross income is Three Hundred Thousand Pesos (P300,OOO.OO) or 
less and One Hundred Fifty Thousand Pesos (Pl50,OOO.OO) for individuals; and 
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(P300,OOO.OO). 
c. Only one spouse is covered by a employer-sponsored retirement plan but the 
combined adjusted gross income is not more than Three Hundred Thousand Pesos 
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SEC. 9. 
Benefits Upon Retirement. - No tax shall be imposed and collected from 
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funds withdrawn from a retirement account created or opened at least five (5) years earlier 
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by any trustor who has reached the age of fifty-five (55) years. 
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All interest of a trustor in a retirement account and/or funds withdrawn from said 
account shall not be subject to levy on attachment or execution as security or for the 
satisfaction of any judgement against the trustor or his spouse. 
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SEC. 10. Tax on Ezrly Withdrawals. - If any withdrawal is made from a retirement 
account before the retirement benefits vest in favor of a trustor as aforestated, a tax 
equivalent to Twenty Percent (20%) of the amount withdrawn if part of the income of the 
retirement account or Ten Percent (10%) of the amount withdrawn if part of the principal 
amount deposited, shall be imposed on the withdrawal: Provided, That no tax shall be 
imposed on any withdrawal of any fund - 
a. used toward the purchase of a first family home for the trustor himself or for any 
member of his immediate family; 
b. used to pay for certain qualified college expenses; 
c. used to pay for medical expenses; 
d. for a trustor who has been disabled or otherwise become physically incapacitated 
to earn income for his subsistence; and 
e. the member has become unemployed for a period of at least three (3) months and 
uses the money to put up capital for small business. 
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SEC. 11. Termination of Tmst. The contributor may terminate a trust at any time, 
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provided, however, that the assets of the PERA are deposited with a new Administrator 
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remain valid and subsisting. 
SEC. 12. 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 
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SEC. 13. Repealing Clause. - All laws, decrees, orders, rules and regulations or parts 
therefore, inconsistent with this Act are hereby amended or modified accordingly. 
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SEC. 14. Effectivity Clause - This act shall take effect fifteen (15) days following its 
publication in a newspaper of general circulation. 
Approved, 
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