THIRTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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First Regular Session 
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INTRODUCED BY HONORABLE MAR . dd&iS; 
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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 fimds and 
who have very limited options. 
Most people loolc forward 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 
being able to enjoy,comfortable and leisurely retirement years. There is therefore a need to 
address the need to design and implement programs that will promote and mobilize savings and 
provide additional resources for social security expansion and at the same time afford individual 
members appropriate returns on their savingshnvestments. 
The absence of retirement funds or savings is a critical hut underreported national 
problem. For the year 2004, approximately 26 million Filipinos were members 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. 
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 a minimum 
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. 
In view of the foregoing, approval of this bill is earnestly sought. 
e 
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Senator \ 


THIRTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
) 
First Regular Session 
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INTRODUCED BY HONORABLE MAR ROXAS 
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 
assem bled: 
SECTION 1. 
Tifle, - This Act shall be known as the “Personal Equity and 
Retirement Account (PERA) Act of 2005.” 
SECTION 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. 
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SECTION 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 “Trust” refers to the trust created or organized by an 
individual, known as “trustor,” for his exclusive use and benefit upon and during his 
retirement, in which said trustor retains only the equitable ownership o f  the fhds he 
deposits therein as savings, as well the income thereof from investments of said fund; 
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. “Trustor” 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. “Year” means every taxable year under the National Internal Revenue Code; 
e. “NotzjjY 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; 
g. “Tax” 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 
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j. “Benejkiuries” 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. 
SECTION 4. Opening ofRetirement 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 Thousand 
Pesos (P20,000,00). 
A married couple may create, organize or open a joint retirement account with an initial 
deposit of not more than Forty Thousand Pesos (P40,OOO.OO). No individual or married couple 
may open a retirement account with an amount more than what is required under this Act. 
SECTION 5. QuaZifing 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 nou-speculative 
SECTION 6. General Investment Rules. - Investment of funds held in the retirement 
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; 
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 evely investment made and income earned on the 
latter’s behalf. 
SECTION 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 
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maximum contribution may be adjusted from time to time to such amount that the Secretary of 
Finance may determine. 
SECTION 8. Income Tax Deductibility. - 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 (PI 50,000.00) for individuals; and 
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 (P300,OOO.OO). 
SECTION 9. Benefits Upon Retirement. -No tax shall be imposed and collected from 
funds withdrawn from a retirement account created or opened at least five (5) years earlier by 
any trustor who has reached the age of fifty-five (55) years. 
All interest of a trustor in a retirement account andor 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. 
SECTION 10. Tax on Ear4 Withdrawals. - If any withdrawal is made from a 
retirement account before the retirement benefits vest in favor of a trustor as aforest 
equivalent to Twenty Percent (20%) of the amount withdrawn if part of the inco 
retirement account or Ten Percent (10%) of the amount withdrawn if part of the princii 
deposited, shall be imposed on the withdrawal: Provided, That no tax shall be impoi 
withdrawal of any fund - 
a. used toward the purchase of a first family home for the trustor himself or for ar 
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 incapacita 
income for his subsistence; and 
e. the member has become unemployed for a period of at least three (3) months a1 
money to put up capital for small business. 
SECTION 11. Termination of Trust. The codtributor may terminate a trust a 
provided, however, that the assets of the PEW are dedosited with a new Administratoi 
SECTION 12. Separability Clause - If any provision or part hereof, is held 
unconstitutional, the remainder of the law or the provision not otherwise affected sh 
valid and subsisting. 
SECTION 13. Repealing Clause. - All laws, decrees, orders, rules and reg 
parts therefore, inconsistent with this Act are hereby amended or modified accordingly. 
SECTION 14. Effectivity Clause - This act shall take effect fifteen (15) days 
Approved, 
its publication in a newspaper of general circulation. 
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