Page | 1 
Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
First Regular Session 
House Bill No. __________ 
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
EXPANDING THE CAPITAL MARKET BY DEVELOPING A ROBUST 
INSTITUTIONAL INVESTOR BASE, STRENGTHENING THE 
REGULATORY ENVIRONMENT, AND PROMOTING FINANCIAL LITERACY 
EXPLANATORY NOTE 
The Role of a Robust Capital Market 
Developing deep and broad capital markets is an important aspect of nation-building. 
Capital markets mobilize savings from households and firms with surplus funds, and channel 
these to those sectors with a need for such funds. It provides the link for the direct 
intermediation of funds from savers to borrowers through the bond and stock markets, while 
indirect financial intermediation channels fund from savers through the banking system. For 
all these channels, the tasks are to allocate savings to their most productive uses. 
The impact on economic growth via all these channels takes place over several decades 
and is not trivial. In fact, the literature provides much evidence of the strong links between 
financial sector development and real per capita economic growth. In addition, financial sector 
development can reduce verification costs, help alleviate credit rationing, and provide for more 
efficient government to person transactions 
Recognizing these benefits, the Government of the Philippines is prioritizing efforts to 
further enlarge and deepen the financial sector, and to increase financial inclusion. Broadening 
our country's financial sector is consistent with enhancing financial inclusion and increasing 
the liquidity of financial markets. It implies growing the country's investor base. A wide 
domestic investor base supports the development of local currency capital markets. It ensures 
varied sources of demand by encouraging the participation of a variety of financial entities 
(banks, pension funds, insurance companies, mutual funds), and non-financial entities 
(nonfinancial corporations, retail investors) practicing a variety of business models, as well as 
foreign investors. 
A comparison of the financial sector in the Philippines with other countries suggests 
ours is smaller, lacks depth, and is more inaccessible. This is unfortunate, because there are 
July 1, 2022 
8:00 am
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many qualitative benefits to financial sector development, including; (i) improved corporate 
governance, (ii) allowing for risk mitigation and intertemporal risk sharing, (iii) a reduction of 
liquidity risk, (iv) a reduction in trading costs, (v) facilitation of exchange, and (vi) 
specialization and innovation. 
But sadly, the Philippines has a relatively small institutional investor base, and a low 
level of assets held by the contractual savings sector (e.g., pensions, insurance companies and 
mutual funds) as a percentage of GDP. Contractual savings, and pensions in particular, 
complement financial sector development, which drives growth. 
Widening Institutional Investor Base 
Pension systems around the world are active participants in capital markets. They 
mobilize 
savings that will not be withdrawn until retirement - long-term savings - which are appropriate 
for financing productive long-term investments, like infrastructure investment. These 
investments include tangible assets (roads, bridges, ports, machinery, factories, commercial 
buildings, hospitals, and new housing units) and intangible assets (such as education and 
research and development) that increase future prospects for innovation and competitiveness. 
Given that pension systems are important sources of productivity-enhancing savings, how these 
systems are designed determine their contribution to capital markets development, long-term 
investment, improving corporate governance and ultimately, productivity and real per capita 
economic 
Our current pension system has a problem - it is small, underfunded and inadequate to 
provide enough income to support old-age retirement. Our pension assets under management 
represent just 16% of Gross Domestic Product (GDP). The Organization for Economic Co-
operation and Development (OECD) average is 124% of GDP while the non-OECD average 
is 36% of GDP. Said another way, we have 1.3 pension assets per worker. Thailand has 126 
pension assets per worker and Singapore has 900,000 pension assets per worker. 
The private pension system, which is meant to supplement the Social Security System 
(SSS) and Government Service Insurance System (GSIS) pensions, has not developed. It has 
its own problems. Foremost of which, is the structure of the law and its implementing 
regulations. Republic Act (RA) No. 7641 does not require pensions to be prefunded, hence, 
pensions are paid out of pocket rather than built-up over the duration of employment, thus, no 
pool of investible assets is created. The pension benefits do not vest until they are sixty (60) 
years old and on the last day of their employment. 
Because pension benefits only vest at their final place of employment, pensions are not 
portable, and the employee is at risk in the event of the employer's bankruptcy. In addition, 
many are working in the informal sector which makes it difficult to enforce pension 
requirements under the current law. With this as background, there is a need to reform the 
private pension fund system. This will not be easy, but the potential benefits are high not only 
for our old age citizens but more so for the development of the capital market. 
First, a large domestic institutional investor base will allow us to largely fund our own 
development. Demand for treasury securities and corporate bonds will increase significantly. 
In addition, professional fund managers can, with the proper incentives, police the market, 


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thereby increasing the effectiveness of our regulatory regime. Second, our country's real per 
capita GDP will grow much more rapidly. This means lower poverty, higher savings rates, 
greater allocative efficiency in financial markets, potentially better corporate governance, 
greater labor supply by more productive workers responding to higher future retirement 
benefits, better infrastructure, and less effective pressure from external fund providers. Third, 
a reformed pension system will provide workers with enough income to cover old age living 
expenses. This will allow their children to build wealth and break generational poverty. 
No less than the Philippine Constitution mandates that the State shall promote a just 
and dynamic social order that will ensure the prosperity and independence of the nation and 
free the people from poverty through policies that provide adequate social services, promote 
full employment, a rising standard of living, and an improved quality of life for all (Article Il, 
Section 9, 1987 Philippine Constitution). 
Along this line, the Constitution highlights the importance of a viable pension system 
in the country, particularly in the grant of various benefits to pensioners or retirees, thus, 
mandating that: “The State shall, from time to time, review to increase the pensions and other 
benefits due to retirees of both the government and the private sectors” (Article XVI, Section 
&, 1987 Philippine Constitution) 
In the 2020 Melbourne Mercer Global Pension Index (MMGPI), the country's pension 
system had been ranked 36" out of thirty-nine (39) countries. It garnered an index value of 43, 
the highest score being 82.6 and, with "A" as the highest, got a grade of "D" (i.e., has some 
desirable features, but also has major weaknesses and/or omissions that need to be addressed). 
The index measures each country's pension system through the three sub-indices of 
sustainability, adequacy and integrity. Given these myriads of issues plaguing our current 
pension system, we should already be past the phase of diagnosis and review. The much-needed 
reforms to deepen our capital markets by developing a robust institutional investor base and 
strengthening the regulatory environment, especially in these pandemic times, is of crucial 
importance. We must start the ball rolling by institutionalizing a mandatory, portable, fully 
funded, and adequate corporate pension fund system. 
In view of the foregoing, the passage of this measure is earnestly sought. 
JOEY SARTE SALCEDA 


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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
First Regular Session 
House Bill No. __________ 
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
EXPANDING THE CAPITAL MARKET BY DEVELOPING A ROBUST 
INSTITUTIONAL INVESTOR BASE, STRENGTHENING THE 
REGULATORY ENVIRONMENT, AND PROMOTING FINANCIAL LITERACY 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Title. – This Act shall be known as the “Capital Market Development Act”. 
SEC. 2. Declaration of Policy. – It is the declared policy of the State to promote a just and 
dynamic social order that will ensure the prosperity of the country and free the people from poverty 
through policies providing adequate social services, and which promote full employment, a rising 
standard of living, and an improved quality of life for all. Towards this end, the Government shall 
develop a deep and broad capital market that shall serve as engine for economic growth and 
financial inclusion. 
The State shall institutionalize a Capital Market Development Council (CMDC), to be 
composed of members from both the public and private sectors representing the finance and 
investment industry, and whose main task shall be to assist the government develop policies and 
the implementing framework that shall promote the expansion and development of the capital 
market on a nationwide scale. In line with this goal, a national strategy for the promotion of 
financial inclusion shall be adopted and implemented through investor education that shall raise 
investor awareness of the alternative savings and investment products such as those that shall be 
available under this Act and encourage long-term investing skills and financial well-being through 
planning and making actual investments. 
The State also acknowledges that expanding the capital market necessitates the 
development of a wide institutional investor base that could best be achieved by adopting a robust 
pension fund system. The State recognizes that the current pension fund system has long been due 
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for reform and as old age income support is now among the major social and economic challenges 
facing many nations, including the Philippines, it is imperative to institute the reforms in the 
country's retirement and pension system. The State shall therefore promote and encourage national 
savings and prudential investments on the part of the employees, and in so doing, vigorously 
stimulate the development of the capital market, in particular, and contribute to the desired 
economic growth of the country in general.  
 
 
 
SEC. 3. Definition of Terms. – As used in this Act: 
 
(a) Contributor refers to any person or entity, such as the employer, employee, or those 
availing under voluntary coverage, making the required contributions to a private pension and 
retirement fund under this Act; 
 
(b) Covered employee refers to any person in the employ of an employer as defined under 
the Labor Code, who is compulsorily covered under Section 10 of this Act; 
 
(c) Covered employer refers to any person, natural or juridical, employing the services of  
the employee as defined under the Labor Code, who is compulsorily covered under Section 10 of 
this Act; 
 
(d) Early withdrawal refers to any withdrawal either wholly or partially, made prior to the 
period of distribution or vesting as set forth under Section 18 hereof; 
 
(e) Employee, Pension and Retirement Income (EPRJ) Account refers to the pension 
account created for the pension owner or EPRI owner under this Act; 
 
(f) EPRI Administrator refers to an entity accredited by the regulatory authorities that is 
responsible for the general management of the EPRI; 
 
(g) EPRIA Asset refers to the aggregate of the assets in the EPRI at any one time, including 
the cash funds and the EPRI investment products into which they are invested and reinvested, and 
all the income earned therefrom; 
 
(h) EPRI Custodian refers to a separate and distinct entity unrelated to the EPRI 
Administrator, accredited by the regulatory authorities, who provides services in connection with 
the custodian hip of funds and securities comprising the EPRI investments. The Custodian shall 
operate independently from the Administrator. The term shall likewise refer to the EPRI owner 
who opts to retain custody, under a self-custodianship arrangement, of the funds and securities 
comprising the EPRI investments; 
 
(i) EPRJ Owner refers to an employee owning, holding and maintaining an EPRI account 
under its name, whether under mandatory or voluntary coverage as provided under this Act; 
 
(j) Investment Manager refers to a regulated person or entity authorized by an EPRI owner 
to make investment decisions for the contributor's EPRI Account and as such, shall assume 
fiduciary duty and responsibility for EPRI investments; 


 
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(k) Investment Product refers to a unit investment trust fund, mutual fund, annuity contract, 
insurance pension products, pre-need pension plan, shares of stock and other securities listed and 
traded in a local exchange, exchange-traded bonds or any other investment product or outlet which 
the concerned regulatory authorities may allow or accredit; 
 
(l) Vesting refers to the conveying to an employee of unconditional entitlement to a share 
in a pension fund; 
 
(m) Voluntary EPRI FUND Owner refers to a person allowed to voluntarily establish an 
EPRI Account in the person's name. It shall include persons specifically excluded from 
compulsory or mandatory coverage under Section 10 hereof, as well as self-employed individuals 
and individuals in the practice of profession; 
 
(n) Start of Employment refers to the first day on which the employee is authorized or 
required by the employer to be on duty in the employer's premises or at the prescribed workplace; 
and  
 
(o) Micro Enterprise refers to any business activity or enterprise that has total assets, 
including those arising from loans but exclusive of the land on which the particular business 
entity's office, plant and equipment are situated, of up to Three Million Philippine Pesos 
(P3,000,000.00), or a higher amount as prescribed by the Magna Carta of Small Enterprises under 
R.A. 8289 or the Barangay Micro Business Enterprises under R.A. 9178, defined as those 
employing not more than ten (10) employees, regardless of business ownership, whether single 
proprietorship, cooperative, partnership or corporation. 
 
 
CHAPTER l 
CREATION OF A CAPITAL MARKET DEVELOPMENT COUNCIL 
 
SEC. 4. Creation and function. – There shall be created a Capital Market Development 
Council (CMDC) composed of institutional members from both the public and private sectors. Its 
main function is to promote and develop the Philippine capital market on a national scale, through 
any or a combination of the following: 
 
 
(a) Recommend policies and reforms for the development and promotion of the Philippine 
capital market; 
 
(b) Identify impediments to capital market development and recommend necessary 
reforms, amendments, or modifications to eliminate such impediments; 
 
(c) Recommend policies that would stimulate medium-and long-term investments into 
productive enterprises; 
 
(d) Promote investor confidence and financial literacy; 
 


 
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(e) Recommend policies to streamline and simplify processes and regulatory procedures to 
ensure the timeliness of registrations or approvals which is critical in dynamic financial markets; 
 
SEC. 5. Membership, Chairperson and Co-Chairpersons. – Membership in the CMDC 
shall be institutional and shall be representative of the public and private sectors, particularly the 
finance and investment industry. The members from the public sector shall be the agencies 
involved in exercising oversight, policy or regulatory functions over the capital market, including 
the Department of Finance (DOF), the Securities and Exchange Commission (SEC), the Bangko 
Sentral ng Pilipinas (BSP), the Bureau of Treasury (BTr) and the Insurance Commission (IC). 
These agencies shall be represented in the CMDC by the highest ranking officer of the agency or· 
office, or a representative who shall not be lower than an undersecretary or deputy or its 
equivalent. 
 
The CMDC shall be chaired by the Secretary of the DOF and co-chaired by a representative 
of the private sector member representing an association or organization that has the most cross- 
sectional members and represents the capital market. The Chairperson and Co- Chairperson shall 
have the power to select, invite or remove members of the CMDC upon good cause. The CMDC 
is empowered to form committees as needed, and to adopt its own set of governing rules and 
procedures, including voting, to ensure the effective and efficient performance of its mandates 
function. 
 
The members from the private sector shall be chosen from industry associations or 
organizations directly involved in the capital market, and who shall be of good standing and 
reputation.  
 
SEC. 6. Capital Market Development Plans or Blueprint. – Every five (5) years, the CMDC 
shall research, develop, plan and recommend to the Secretary of Finance a set of capital market 
development plans that will constitute the country's capital market roadmap. These plans shall 
identify priority programs and projects, the formulation of which shall involve consultations with 
concerned capital market organizations and regulatory agencies, and regional and international 
capital market participants, if necessary. 
 
The implementation of these plans by the appropriate government agencies or private 
offices shall be monitored, reviewed and calibrated on a periodic basis taking into account the 
developments in the capital market of the country, the region and the rest of the world. 
 
 
CHAPTER 2 
FINANCIAL LITERACY AND INVESTMENT EDUCATION 
 
SEC. 7. Financial literacy and Investment Education. – The CMDC shall ·recommend to 
relevant government institutions involved in the educational system, a comprehensive, and 
globally-benchmarked national investor education program that is aligned with the National 
Strategy for Financial Inclusion. The said program shall be integrated with the enhanced basic 
education program prescribed under Section 4 of Republic Act No. 10533 otherwise known as the 
“Enhanced Basic Education Act of 2013”, or in higher education or out-of-school youth programs. 


 
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It shall include the basic knowledge on savings and investments that will focus on providing an 
overview of short and long-term investment instruments available to retail investors such as those 
that may be available under this Act, the risks and rewards of savings and investment, available 
investments in the domestic capital market, alternative investments, investor protection safeguards 
provided under existing regulations, and how to recognize and avoid financial fraud, among others. 
 
The implementation of the education program shall use the latest technology such as online 
or digital gateway, podcasts, among others, in order to reach as many target individuals as possible 
nationwide. These materials shall be made accessible to schools, universities and employers of the 
working class, which shall maintain a record of completion of the courses. 
 
 
SEC. 8. Promoting Financial Literacy. – All government agencies and offices as well as 
private corporations and individuals involved in the finance and investments industry shall 
promote financial literacy to potential investors by disseminating relevant information about 
investments and effecting the appropriate interventions, such as educational and training materials, 
individualized advisor and consultation, social media informational materials. 
 
To ensure the broadest participation in the pension fund system, DOF, DOLE, DTI, the 
BSP, SEC, the IC, all private investment managers, administrators, and other financial institutions 
and capital market players involved, in whatever capacity, to provide the necessary information 
and assistance to existing and potential holders of EPRI accounts. 
 
Employee and employer organizations, and labor unions are likewise mandated to promote 
financial literacy among their members. 
 
Detailed guidelines in the implementation of this provision shall be included in the joint 
implementing regulations mandated under Section 33 hereof, and in any other subsequent 
issuances. 
 
 
CHAPTER 3 
EMPLOYEE PENSION AND RETIREMENT INCOME FUND 
 
SEC. 9. Establishment of an Employee Pension and Retirement Income Account. – There 
shall be established at the start of employment a mandatory, fully funded and portable Employee 
Pension and Retirement Income (EPRI) Account. The creation of the EPRI account of the 
employee shall be the responsibility of both the employer and the employee. 
 
The EPRI account shall be under the name of the employee bearing the employee's PhilSys 
Number (PSN) under Republic Act 11055, otherwise known as the “Philippine Identification 
System Act”. If said PSN is not yet available at the time of the EPRI establishment, a Pension 
Retirement and Income Number (PRIN) shall be assigned in the interim under the rules issued by 
the regulatory authorities. Such PRIN shall be replaced with the PSN upon its availability. 
 
An employee or those voluntarily covered shall only have one EPRI Account. The EPRI 


 
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Account shall be a permanent EPRI account until retirement and shall be owned, maintained, and 
managed by the owner regardless of changes in employment or transfer of employer. 
 
SEC. 10. Compulsory Coverage of Employees and Employers. – The EPRI shall cover all 
employees and employers as defined under the Labor Code of the Philippines and its implementing 
regulations. It will also cover, ·all corporations, whether domestic or resident foreign corporation, 
general professional partnerships and such other entities, whether registered or not, having persons 
under its employ. 
 
The following are not compulsorily covered under this Act: 
 
(a) Employees of the National Government and its political subdivisions, including 
government-owned or controlled corporations; 
 
(b) Domestic workers under Republic Act No. 10361 or the “Domestic Workers Act” or 
“Batas Kasambahay”; 
 
(c) Overseas Filipino Workers; 
 
(d) Employees of a microenterprise with less than three (3) years service and who are not 
yet EPRI owners; and 
 
(e) All those specifically excluded by the regulatory authorities in an implementing 
regulation. 
 
SEC. 11. Voluntary Coverage. – Self-employed and professionals, as well as those not 
compulsorily covered under Section 10 hereof, may opt for voluntary coverage under this Act. The 
contributions to the EPRI will be borne and paid solely by those opting for voluntary coverage. 
Once und voluntary coverage, all the provisions of this Act as well as the governing policies, rules 
and regulations thereof shall equally apply to them similar to those under compulsory coverage. 
 
SEC. 12. Change Status from Mandatory to Voluntary Coverage or Vice-versa. – Any 
interruption in the contribution to an EPRI account due to changes in the status of the EPRI Owner 
from compulsory total voluntary, or vice-versa, shall not cause the termination or cancellation of 
the EPRI Account. An EPRI account already established shall continue to exist until vesting or 
upon the retirement of the EPRI Owner except in instances as may be determined by the regulatory 
agency under the implementing regulations under Section 40 of this Act. 
 
The changes in status contemplated under this Section shall include: 
 
(a) Change in employment from a covered private employer to a non-covered employer, 
whether private or government; 
 
(b) Change of employment from employed to self-employed; 
 
(c) Change from voluntary to compulsory coverage; 


 
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(d) Other similar situations that will disrupt the contributions, or will change the status of 
the EPRI over, as may be determined by the regulatory authorities in the implementing regulation.  
 
SEC. 13. EPRI Account Ownership. – The EPRI Account shall be owned, held, and 
maintained under the name of the employee and under the employee's sole and full control. The 
employee, as EPRI Owner, shall exercise all the complete and unrestricted rights, privileges, 
discretion and prerogatives as to the management, investment and maintenance of the EPRI 
Account during its lifetime and until vesting. 
 
Any income, interest or gains derived from the investment of the EPRI shall form part of 
the EPRI Asset as owned or held by the EPRI Owner. 
 
SEC. 14. Mandatory Funding and Contribution. – Both the employee and the employer 
shall be obliged to mandatory contribute to the EPRI Account. The amount of such contribution, 
which shall be fair, equitable, affordable, adequate and sustainable, shall be determined by the IC 
in an implementing rules and regulations.  
 
Provided, that the initial contribution of the employer shall be 4% while that of the 
employee. Provided that it shall be 1% if receiving a salary above the minimum wage, and 0% if 
minimum wage earner or below. The rate of contribution shall be based on basic pay only, 
excluding all other benefits received from employment; Provided further, That, if the employer is 
a micro enterprise as defined under Section  3(n) of this Act, only its employees with a minimum 
period of three (3) years of service, and current EPRI owners at the time of hiring, shall be 
mandatorily covered by this Act; Provided, finally, That the contribution of the employer and the 
employee may be subsequently increased by the IC, in consultation with the DOF, the DOLE, and 
the National Tripartite Industrial Peace Council (NTIPC), but at no instance shall the total 
contribution by each of the employee and employer, computed separately, exceed 5% of the basic 
pay nor shall the annual contribution exceed Pl60,000, which amount shall be adjusted for inflation 
every three (3) years. 
 
For those under voluntary coverage, the contribution to the EPRI shall be equivalent to the 
employee's share, unless the voluntary EPRI Account holder opts to include the employer's share 
as his additional contribution. 
 
SEC. 15. Remittance of Contributions. – The contribution imposed in the preceding section 
shall be remitted to the EPRI Account within the first ten (10) days of each calendar month 
following the month for which they are applicable or within such time as the IC may prescribe. 
Every employer required to deduct and to remit such contributions shall be liable for any default 
in the payment of such contributions and the payment of the penalty prescribed under Section 33 
of this Act. If deemed expedient and convenient, at the option of the employer, the collection and 
remittance of contributions shall be made quarterly or semi-annually in advance, the contributions 
payable by the employees to be advanced by their respective employers: Provided, that upon 
separation of an employee, any contribution so paid in advance but not due shall be credited or 
refunded to his employer. 
 


 
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SEC. 16. Investments; Default Investment Option. – The EPRI Owner shall make all 
investment decisions pertaining to the EPRI Asset which shall however be limited to the EPRI 
investment products as defined under Section 3(k) of this Act.  
 
The concerned regulatory authorities shall determine a default investment product or 
products on which the EPRI shall be invested in the event that the EPRI Owner fails to choose 
which product to invest on. This default option shall be periodically reviewed by the regulatory 
authorities as to investment risks, profitability and sustainability, and to prescribe a new default 
option, as and when necessary.  
 
The EPRI Owner may appoint an Investment Manager from among the accredited 
Investment Managers as defined under Section 3 hereof, to provide financial advice and make 
sound and prudent investment decisions on the owner’s behalf. An Investment Manager shall act 
with utmost fidelity by observing policies directed towards confidentiality, scrupulous care, safety 
and prudent management of EPRI Assets.  
 
The regulatory authorities shall define and provide specific metrics and parameters for 
accreditation of investment products as are necessary.   
 
Accredited investment products may be designed to cater to the different risk and return 
profiles of EPRI account holders provided that each investment product is classified appropriately 
according to risk level and managed in accordance with its stated investment objectives. 
 
SEC. 17. Retirement Age. – A covered employee, upon reaching the mandatory age of 
retirement as prescribed by existing laws, shall retire and avail of the benefits under Section 18 of 
this Act.  
 
Those persons under voluntary coverage will also be subject to the same conditions relative 
to the compulsory retirement age as provided by existing laws. 
 
SEC. 18. Availment and Vesting of Benefits. – Upon reaching the optional or compulsory 
age of retirement under existing laws or any of the instances allowed by the regulatory authorities 
for vesting or termination, the retiring employee, or EPRI Owner shall be entitled to all the EPRI 
Assets at the time of vesting for retirement. Such assets shall include all contributions and all the 
fruits thereof, including any investments that have been made out of the EPRJ account.  
 
The distribution of benefits shall be made in either lump sum or pension payments, the 
latter being paid either for a specified fixed period or a lifetime pension. The choice for the manner 
of payment as well as the payment period shall be made by the EPRI Owner on or before the time 
of vesting or benefit availment. 
 
 
SEC. 19. Mandatory Minimum Benefits. – Other than the benefits stated under Section 18 
hereof, and except for employees opting to be covered by RA 9461 and existing employee 
retirement plans as allowed under the transitory provisions of this Act, there shall be no required 
minimum benefits to be vested to the employee at the time of retirement. 
 
 


 
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SEC. 20. Beneficiary. – An EPRJ owner can designate a Beneficiary of choice. Upon 
vesting, retirement or termination, an EPRI owner can assign the rights over the EPRJ Assets or 
pension benefits to another person.  
 
However, if the EP owner dies before vesting or termination under Section 18 hereof 
without designating a beneficiary, the Laws on Succession of the New Civil Code of the 
Philippines shall apply for purposes of determining the beneficiary.  
 
 
An EPRI owner designates their beneficiary or beneficiaries and has the right to challenge 
their beneficiaries anytime. 
 
SEC. 21. EPRI Asset Sustainability, Adequacy and Actuarial Fairness. – All the necessary 
policies and measures shall be promulgated, implemented and undertaken by the regulatory 
authorities to ensure that the EPRJ asset shall be adequate and sustainable. 
 
The sustainability of the EPRJ Asset shall take into consideration the desired and 
reasonably adequate replacement rate as determined jointly by the DOF, DOLE and the IC. The 
desired replacement rate shall be subject to periodic review and evaluation at least once every five 
(5) years. 
 
SEC. 22. Early Withdrawal Exceptions. – Except in cases allowed under this Section, early 
withdrawals shall not be allowed.  
 
Early withdrawal of premature termination shall be subject to penalties under Section 33 
hereof: Provided however, no penalty shall be imposed on any withdrawal of or any portion of the 
EPRJ Asset for the following purposes: 
 
 
(a) For payment to an employee who has been subsequently rendered permanently totally 
disabled as defined under the Employees Compensation Law, Social Security Law or Government 
Service Insurance System Law; 
 
(b) Death of the EPRI Owner; and  
 
(c) For such other analogous purposes as may be declared by the IC, in consultation with 
the DOLE, as embodied in implementing regulations.  
 
SEC. 23. Tax Treatment. – The contributions made for, or income and benefits received 
from an EPRI account under this Act shall be treated as follows: 
 
(a)  Taxation of Contributions. – The employer's contribution made under Section 14 of 
this Act, shall be allowed as deductible expense of the employer subject to the substantiation 
requirements under the National Internal Revenue Code (NIRC), as amended. Such mandatory 
contributions made by the employer to the employee's EPRI account shall not also be considered 
as part of the employee's compensation subject to income tax. On the other hand, the employee's 
contribution out of the compensation received from the employer, shall form part of the employee's 
compensation income subject to income tax.  


 
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(b) Taxation of Investment Income. – All income of whatever nature earned by the EPRI, 
including interest and gains earned from the placements or investments of the EPRI assets, shall 
be exempt from all taxes. In case of transactions subject to the Documentary Stamp Tax (DST), 
the DST shall be borne by the other party who is not exempt from payment thereof. 
 
(c) Taxation of Benefits. – All benefits and distributions received by the employee at the 
time of vesting or retirement under Section 18 hereof, shall be exempt from all taxes.   
 
At no instance shall the EPRI account be subject to the value-added tax or the business tax 
under Title IV and V of the NIRC, as amended, notwithstanding the regularity of its investment 
activities. 
 
SEC. 24. Regulatory Authorities. – The EPRI Account created under this Act, including 
those involved in the implementation, administration, management and custody of its fund and 
assets, shall be placed under the regulation, supervision and administration of the DOF, IC, SEC, 
and the BSP, either jointly or singly, as laid down in the succeeding Sections hereof.  
 
For this purpose, the current administrative, supervisory and regulatory powers of the IC, 
SEC and the BSP are deemed expanded, modified and amended to include the exercise of 
administrative, supervisory and regulatory authority over the EPRI accounts constituted under this 
Act, including the exercise of quasi-legislative and quasi-judicial powers relative thereto.   
 
All matters and issues under this Act and specifically pertaining to the EPRI Account shall 
be within the exclusive jurisdiction of the IC, SEC and the BSP, as stated under Sections 25, 26 
and 27 hereof. 
 
SEC. 25. Functions of the Bangko Sentral ng Pilipinas. – The BSP shall have the following 
functions: 
 
(a) Formulate, promulgate and implement the needed and required policies, mechanisms 
and rules, on the following matters, among others: 
 
(1) Qualification and disqualification, and accreditation standards of BSP-supervised 
financial institutions to act as Investment Managers, including directors and 
officers thereof; 
 
(2) Pre-operating requirements of banks to engage in investment management 
activities; 
 
(3) Conduct of investment management activities; 
 
(4) Impose sanctions for violations of any regulations related to its regulatory actions 
mandated under this law, including restricting the ability to collect excessive or 
unreasonable fees. 
 


 
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SEC. 26. Functions of the Securities and Exchange Commission. – The SEC shall have the 
following functions: 
 
(a) Formulate, promulgate and implement the needed and required policies, mechanisms 
and rules, on the following matters, among others: 
 
(1) Qualification and disqualification, and accreditation standards of licensed 
investment company advisers, and other entities or individuals who shall act as 
Investment Managers, including directors and officers thereof; 
 
(2) Qualification and disqualification, and accreditation standards for Administrators 
and Custodians, including directors and officers thereof; 
 
(3) Reasonableness of fees to be charged by the Administrator and Custodian including 
the imposition of fee cap as may be necessary; 
 
(4) Minimum requirements imposed on the Administrators as regards inculcating 
financial literacy to investors; 
 
(5) Record-keeping, reporting and audit requirement of Administrators and Custodians 
pertaining to records for all contributions, earnings and total account balances; and 
 
(6) Impose penalties for violations of any regulations related to its regulatory actions 
mandated under this law. 
 
(b) Impose administrative sanctions against investment company advisers, fund manager 
and other financial entities under the regulatory power of the SEC, or their directors, principal 
officers, and/or majority stockholders, if found to have engaged in unauthorized investment 
management activities; and  
 
(c) Undertake other functions as may be necessary for the full and efficient implementation 
of this Act. 
 
SEC. 27. Functions of the Insurance Commission. – The IC shall, in addition to all other 
powers and functions vested upon and required of it under this law, have the following functions: 
 
(a) Formulate, promulgate and implement the needed and required policies, mechanisms 
and rules on the following matters, among others: 
 
(1) Qualification or eligibility of EPRI investment products, in coordination with BSP 
and SEC; 
 
(2) Valuation standards for EPRI investments; 
 
(3) Disclosure requirements on the terms and conditions of the EPRI investments; 
 


 
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(4) Ascertainment of EPRI Owner's suitability for EPRI products, in coordination with 
BSP and SEC; 
 
(5) Impose penalties for violations of any regulations related to its regulatory functions 
mandated under this law; 
 
(6) Compromise, release, condone, in whole or in part, any interest, penalty or civil 
liability, arising from the provisions of this Act; approve or restructure the payment 
of unpaid or unremitted contributions; and attach, garnish, levy and sell properties 
of delinquent employers for satisfying long overdue and unremitted collections, 
subject to the rules and regulations, and such other issuances as may be 
promulgated by the DOF. 
 
(b) Determine the amount of increase in contributions of the employer, employee, or those 
under voluntary coverage, which shall be subject to periodic review at least once every three (3) 
years to commence upon the issuance of the implementing regulations fixing the contribution rate 
pursuant to this Act;  
 
(c) Determine caps on contributions in accordance with Section 14 hereof; 
 
(d) Assist and advise the DOF and DOLE of the review and determination of the desired 
replacement rate, as mandated under Section 21 hereof; 
 
(e) Submit reports to DOF and DOLE as may be required by them; and 
 
(f) Enlist the aid and support of, and deputize any and all enforcement agencies of the 
government in the implementation of its powers and functions under this Act;  
 
(g) Undertake other functions as may be necessary for the full and efficient implementation 
of this Act. 
 
SEC. 28. EPRI Administration and Management. – The administration, management and 
custody of the EPRI Account and its Assets shall be undertaken by qualified private companies 
that shall act as the EPRI Administrator which will be chosen by the employee from among those 
accredited by the regulatory authorities. An EPRI owner can, however, opt to take self-custody of 
the EPRI Account and its Assets.  
 
SEC. 29. Functions of EPRI Administrator, Investment Manager and Custodian. – The 
EPRI Administrator shall have the following functions: 
 
(a) Oversee, administer, and manage the EPRI Account on behalf of the EPRI Owner; 
 
(b) Undertake reporting on contributions made to the account, computing the values of 
investments, enforcing EPRI  contributions and  withdrawal limits, collecting appropriate taxes 
and penalties for the government, consolidating reports on all investments, income, expenses and 
withdrawals on the account and ensuring that EPRI contributions are invested in accordance with 


 
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the prudential guidelines set by the regulatory authorities; 
 
(c) Educate the contributors on the relevant information regarding investments; and 
 
(d) Report the EPRI Owner as well as to the concerned regulatory authorities at designated 
regular intervals or periods all the funds, financial transactions and all documents under its 
management and administration and, if applicable, in its custody.  
 
The EPRI Administrator, subject to the strict rules and guidelines issued by the regulatory 
authorities, cannot simultaneously act for the same account as EPRI Custodian or Investment 
Manager.  
 
The custodian shall be responsible for receiving all funds in connection with the EPRI, 
maintaining custody of all original securities, evidence of deposits or other evidence of investment. 
The Custodian is required to report to the Contributor and the concerned regulatory authorities at 
regular intervals all financial transactions and all documents in its custody under the EPRI. The 
custodian shall be separate from the EPRI Administrator and Investment manager for the same 
account. 
 
The investment manager shall make decisions for and in behalf of the EPRI Owner in 
accordance with the authority wanted by the EPRI Owner: Provided, That an investment manager 
shall not be allowed to recommend or sell its own investment products or that of its subsidiaries 
and affiliates: Provided Further, that an investment. managers shall not be allowed to sell 
investment products that are not accredited by the regulatory authorities. An investment manager 
cannot simultaneously act as an investment administrator or custodian for the same account. 
 
SEC. 30. Fiduciary Relation and Exercise of Prudence. – The EPRI Administrator and 
Custodian are, at times, deemed to have a fiduciary relationship with the EPRI Owner. The EPRI 
Administrator and Custodian shall perform their responsibilities and duties and manage, 
administer and take care of the EPRI under their management and custody with the diligence that 
a prudent man would exercise in the conduct of an enterprise of a like character and with similar 
aims. 
 
SEC. 31. Transparency and Regular Audit. – The EPRI and the EPRI Administrator and 
Custodian shall be subject to a regular audit in accordance with the audit and monitoring guidelines 
promulgated by the SEC and the BSP. Policies and measures for complete transparency 
promulgated by the SEC and BSP shall be observed and complied with by the EPRI Administrator 
and Custodian at all times, including EPRI management, administration and custody as well as the 
costs or expenses incurred relative to such management, administration and custody. 
 
SEC. 32. Transition to EPRI. – Employees shall be allowed a one-time option to stay under 
the coverage of Republic Act No. 7641, otherwise known as the "Retirement Pay Law", or under 
an existing employee retirement pension plan within one (1) year from the effectivity of this Act, 
such option to be communicated to the present employer. Failure to exercise such an option shall 
automatically subject the employee under the coverage of this Act. Employees entering the 
workforce for the first time after the effectivity of this Act shall be governed by the provisions of 


 
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this Act. 
 
In case an employee covered by an employee retirement plan opts to be covered by this 
Act upon its effectivity, the employer shall be mandated to transfer to the EPRI account all 
contributions made by the employee and the employer, including all fruits and income that have 
accrued at the time of the transfer. Likewise, existing accounts under the Personal Equity 
Retirement Act (PERA) can be converted to an EPRI Account under this Act. Those who choose 
to be covered by RA7641 or by an existing employee retirement plan shall be exempted from 
compliance with this Act. Likewise, those covered by this Act shall no longer be covered by RA 
7641. 
 
The IC shall issue the necessary guidelines to implement this Section.  
 
SEC. 33. Penalties for Violations of Act. – A fine of not less than Fifty thousand pesos 
(P50,000.00) nor more than Five Hundred thousand pesos (P500,000.00) or imprisonment of not 
less than six (6) years and one (1) day to not more than twelve (12) 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, acting alone or in connivance with 
others, shall commit the following: 
 
(a) Failure by the employer to remit the contributions to the EPRI Account: Provided That, 
only the civil penalty shall be imposed if the failure is for justifiable reasons; Provided, Further, 
that, for first and second time offenders without justifiable cause, only the civil penalty will be 
imposed; Provided, Finally, that the employer who failed to remit the contributions to the EPRI 
Account shall pay, besides the contribution, a penalty thereon of two percent (2%) per month from 
the date the contribution is due until paid; 
 
(b) Act as EPRI Administrator/Custodian or Investment Manager or Advisor without being 
properly qualified or without being granted prior accreditation by the concerned regulatory 
authorities; 
 
(c) Knowingly and willfully invest the funds of and EPRI account without authority from 
the EPRI Owner, or invest such funds in contravention to the instructions of the EPRI Owner; 
 
(d) 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; 
 
(e) Misappropriate or convert, to the prejudice of the employee or employer, contributions 
to and investments or income from the EPRI; 
 
(f) By gross negligence, cause any  loss, conversion,  or misappropriation of the 
contributions to, or investments from, the EPRI; or 
 
(g) Willful violation of any provision of this Act or the rules and regulations issued 
pursuant to this Act. 


 
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The above penalty shall not preclude the EPRI Owner and the regulatory authorities from 
recovering from the Administrator, Custodian or Investment Manager the amount misappropriated 
or lost in situations covered under (c), (e) and (f) of this Section. The regulatory authorities shall 
assist, and if warranted, file the case for recovery, for and on behalf of the owner. 
 
Any amount spent by the regulatory authorities to pursue the case shall be reimbursed by 
the EPRI Owner and shall be deducted from the amount recovered. Likewise, the above penalties 
shall be without prejudice to whatever civil or criminal liability provided for under applicable laws 
that can be imposed for the same act or omission.  
 
SEC. 34. Penalties for early withdrawal Abuse of Tax Exemption and Privileges. – Any 
EPRI Owner, who prematurely withdraws from the EPRI Account, unless exempted under Section 
22 hereof, shall refund or pay to the government an amount equivalent to fifty percent (50%) of 
any amount withdrawn consisting of income earned by the fund, plus the employer's contributions.  
 
The amount to be subjected to the penalty shall be the amount withdrawn less the amount 
of employee contributions at the time of withdrawal. 
 
SEC. 35. Non-Assignability and Free from Levy. – Any provision of law to the contrary 
notwithstanding, no portion of the EPRI or assets of the EPRI may be assigned, alienated, pledged, 
encumbered, attached, garnished, seized or levied upon, by or under any administrative, legal or 
equitable process whatsoever. 
 
SEC. 36. Separate Asset. – The EPRI Assets shall be kept separate and not considered 
assets of the EPRI Owner for purposes of insolvency and estate taxes. 
 
SEC. 37. Re-organization and Augmentation of Personnel Complement. – The regulatory 
authorities, in coordination with the Department of Budget and Management and the DOF, are 
hereby authorized to streamline and augment their human resource component, as well as to create 
units, divisions or offices, as the case may be, to enable it to effectively and efficiently perform its 
functions and responsibilities set forth under this Act. 
 
 
CHAPTER 4 
OVERSIGHT RESPONSIBILITY 
 
SEC. 38. Oversight Committee. – There is hereby created a Joint Congressional Oversight 
Committee (JCOC) to oversee, monitor, and evaluate the implementation of this Act. The JCOC 
shall be composed of five (5) members each from the House of Representatives and the Senate. 
The JCOC shall be co-chaired by the Chairpersons of the House Committee on Banks and 
Financial Intermediaries and the Senate Committee on Banks, Financial Institutions and 
Currencies. 
 
The Speaker and the Senate President shall designate the other four members of the JCOC 
of the House and the Senate from among the members of the House Committee on Banks and 


 
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Financial Intermediaries and the Senate Committee on Banks, Financial Institutions and 
Currencies, at least one member of which shall be from the minority. 
 
 
CHAPTER 5 
FINAL PROVISIONS 
 
SEC 39. Implementing Regulations. – The DOF, BSP, SEC and IC shall issue regulations 
to implement the provisions of this law within six (6) months from its effectivity. Within the same 
period, the Department of Education (DepEd), in consultation with the CMDC, BSP, SEC, IC, and 
such other agencies as may be called upon by the regulatory authorities, shall promulgate rules 
and regulation to effectively implement the financial literacy provisions under Sections 7 and 8 of 
this Act. 
 
SEC. 40. 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. 
 
SEC. 41. Repealing Clause. – All laws, decrees, orders, rules and regulations or parts 
thereof inconsistent with this Act are hereby amended, repealed or modified accordingly.  
 
SEC. 42. Effectivity. – This Act shall take effect fifteen (15) days following its publication 
in the Official Gazette or in a newspaper of general circulation in the Philippines. 
 
Approved,