Most people look forward to retirement as a moment when they will 
fmally 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 a comfortable and leisurely retirement. 
The absence of retirement funds and savings is a critic 
but 
underreported national problem. For the year 1998, only 1.25 illion 
people are covered by the GSXS, 19 million people are members? 
the 
SSS and approximately 4 million people are covered by the PA -IBIG 
find. 
In other words, only about 24.5 million of the 73.13 million 
Filipinos have some kind of a retirement plan. 
a 
In deed, the government is called upon and obligated to develop in 
the Filipino people sufficient awareness and understanding of the 
importance of retirement savings and the necessity that everyone sbxt 
the habit of saving as soon as possible. Sans savings, people will not 
enjoy the remaining years of their lives due to the financial 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 introduces the Personal Equity Retirement 
Account (PEW) which we hope will be accepted as an essential and 
valuable tool in encouraging savings for our people's retirement years. 
A PEW is a long-term savings plan designed to achieve a 
comfortable and financially secure retirement through planned savings, 
sound investment and tax deferral. Through a PEW, one is encouraged 
to save because conLributions to the savings funds are deductible from 
taxable income, and earnings of said savings are tax deferred. Funds are 
taxed only upon withdrawal from PERA. 
APERA is-likewise a flexible investment scheme. In case of certain 
specified emergencies, one can withdraw a portion of his or her money 
from the PEW with a minimum of inconvenience. In that way it is 
unlike other pension schemes wherein one's money is locked in and 
rendered practically inaccessible for immediate and un-programmed 
needs. 
The PEW 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 fund 


even directly manage their PERas as an investment portfolio, since PEE4 
investors can always choose suitable arrangements in accordance with 
their present economic status and future financial objectives. 
PERA has likewise been designed to benefit 8 good part of our 
working populace who axe not members of government insurance funds 
and who have very limited options. In addition, for the first time, the 
self-employed will be allowed to participate in a retirement program 
through a SEP-PERA. 
The value of the account is the total of the contributions plus, or 
minus, the gains or losses thereon. PERAS and SEP-PERAS axe not 
intended to rephce 
.- . SSS or GSIS and are not designed to be used as 
liquid SSsets. 
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. 
n 
. 


licy - It is declared the policy of the 
s for persons comprised of voluntary 
8EG. 3. De 
~~~~~~ 
of ~~~~~ 
- As used in this Act, unless the 
personal savings and investments supported by government incentives. 
context otherwise requires, the following terms shall have the following 
significance: 
a. 
b. 
C. 
d. 
e. 
f. 
g. 
h. 
“Administration” is an investment house duly authorized 
Securities aild Exchange Commission; 
“Compensation” is all actual remuncralcion received for emp 
of services, or from self-employment, of m y  type, including, 
limited to fees, salaries, wages, commissions or income deriv 
the conduct of a trade or business, or from the exerci 
profession, or from providing consulting services, or from distributive 
shares from the net income of a general professional partnership; 
“Contributor“ is a person who establishes a PERA or SEP-PERA 
account with an investment house. The Contributor must be the 
beneficiary of his or her own PEW or SEP-PER4 account; 
”PERA” refers to the trust created or organized by a person who is 
employed by another person or by a company, known s the Trustor 
or Contributor, for his or her exclusive use and benefit, in which 
said Trustor or Contributor retains the beneficial ownership of funds 
he or she deposits therein, as well as the income and earnings 
thereon from investment of said funds; 
”Retirement Age” is the age when a person becomes qualified to 
receive benefits from the SSS program; 
“SEP-PERA“ refers to the trust created or organkd by a person who 
is self-employed, known As the Trustor or Contributor, for his or her 
exclusive use and benefit, in which said Trustor or Contributor 
retains the beneficial ownership of funds he or she deposits therein, 
as well as the income and earnings thereon from investment of said 
funds; 
“SSS“ 
is the Social Security System of the Republic of the 
Philippines; 
“Trustee” is a bank or trust company duly authorized by the Baplgko 
Sentral ng Pilipinas, an investment company duly authorized by the 
Y- 
-c 


Securities and Exchange Commission, a life insuraace company ddlr 
authorized by the Office of the Insurance Commission or a pre-need 
company duly authorized under the terms of the applicable laws. 
The Trustee holds legal title to the contributions and earnings in a 
PEW or SEP-PERA administered on behalf of a Trustor until the 
retirement of the Trustos or the transfer of assets of the trust as 
provided in this Act; and 
"Trustor" is a person who establishes and makes contributions to a 
PERA or SEP-PEW and who desiwates a Trustee to administer and 
manage said account. 
The Trustor retains beneficial title to 
contributione, income and earnhgs in a PEM or SEP-PERA. The 
Trustor must be the beneficiary of his or her own PERA or $EP- 
PEW. 
i. 
4, TBU8t ~~~~e 
y - Investment houses, 
companies, and 
ce companies shall be accredited as 
trusts but shall not be required to obtain a separate trust authorization 
by the Bangko Sentral ng Pilipinas to offer and operate PEW and SEP- 
PEW accounts. Notwithstanding any provisions of the Pre-Need Plan 
Code of the Philippines, or any other law to the contrary, pre-need 
companies shall be required to deposit one hundred percent (100%) of 
the Contributions to PEW and SPE-PEW accounts into the trust and 
fund of the company. Expenses and charges of the pre-need company 
shall be billed to the trust fund which shall then make the necessary 
disbursements. 
summary, prepared by the actuary, of the actuary's 
annual report regarding the activity of the trust fund shall be sent to 
each PEW or SEP-PERA holder at the expense of the pre-need company. 
The summary shall contain, at a minimum, the total contributions 
received, the totd expenses and charges paid, both in absolute number 
of pesos and as a percentage of contributions, the total earnings and 
income of the fund, both in absolute pesos and in percentages, and the 
total vaIue of the l"hmd. 
t - PERA and SEP-PERA accounts s all be 
kept separate from the other assets of Trustee or Administrator an shall 
not be part of the general assets of a Trustee or Administrat r for 
purposes of bankruptcy. 
1 
- 
Any person who is 
er person or company, who is of legal age, who is 
earning an income and who is a participant in SSS or GSlS may 
establish a PERA with a Trustee or Administrator. 
I Any person who is self- 
employed, who is of legal age, who is earning an income and who is a 
participant in SSS or GSIS may establish a SEF-PERA with a Trustee or 
Administrator. 
P - Notwithstanding any 
other investment provisions in any other law to the contrary, 
contributions made to a PEW or SEP-PERA, and the earnings thereon, 
may be invested only in: 
a. any equity listed on the Philippine Stock Exchange and any 
corporate or government bond, or commercial paper that is rated 
by at least two recognized sating agencies in the Philippines; 


b. investments denominated in foreign currencies which c 
are authorized by the Bangko Sentral ng Pilipinas, inc 
, that such investments do not exceed seven 
half percent (7.5%) or whatever is the then current SS 
foreign denominated investments. This limit shall be 
to the aggregate PERA and SEP-PERA assets held by the Trustee 
or Administrator; 
c. asset backed securities, common trust funds, investment 
companies (mutual funds and life insurance, annuity and pre- 
need contracts; and 
d. cash and bank deposits in local currencies and foreign currencies 
which are authorized by the Bangko Sentral ng Pilipinas. 
. s themselves, traded on any recognized 
Specific limits on investment categories shall be the subject of 
regulations. 
a. A Contributor who establishes a PERA or SEP-PERA account held 
by an investment house may self-direct his or her investment, but 
on1.y after consulting with a braker/dealer, 
The Contributor, 
however, retains the authority for the final decision on all 
investments. 
b. A Trustor or Contributor may give a Trustee or Administrator 
written authority to make all investment choices without first 
consulting the Trustor or Contributor. 
c. Investments may be made in life insurance, annuity and pre-need 
contracts only where the maximum expenses for such contracts do 
not exceed one and one-half percent (1.5%) of the annual 
contribution. 
m. P 
a. An employee who participates in an employer retirement plan may 
make a maximum contribution of P18,OOO for the tax year 2001. 
For each and every tax year thereafter, for which he or she is 
employed and earning an income, the employee may make a 
maximum contributio 
fifteen percent (15%) of all 
Compensation, 
~~~~ 
that 
the 
maximum 
contribution shall not exceed fifteen percent (15%) of 
annualized average monthly salary credit. 
b. No contributions may be made to a PERA in exces 
deductible amounts. 
c. Employers are not allowed to make contributions to a FEW of an 
employee. 
a. 
A self-employed person may make a maximum contribution of 
P28,000 for the tax year 2001. For each and every tax year 
thereafter, for which he or she is self-employed and earning an 
income, the person may make a maximum contribution of 
twenty-three percent (230/0) of total annual Compensation: 
d, that the maximum annual contribution shall not 


exceed twen.ty4Iree percent (23%) of the SSS annualized 
average monthly salary credit. 
No contributions may be made to a SEP-PF3Rfl in excess of the 
deductible amounts. 
A self-employed person may not make a contribution to his or 
her SPE-PERfl on behalf of his or her own company. 
8EC. 3.2 
- Fifteen percent ( 
uctible from the tax 
b. 
c. 
the amount of 
on the taxable income of,the Trustor or Contributor in the 
contribution is actually made. All investment earnings and in 
tax deferred until withdrawn and shall not be subject to any withholding 
taxes imposed under Section 57, Section 60, and any other applicable 
section(s), of The National Revenue Code of 1997 (Revenue Code) and 
Sections 2,57-1 and 2.57-2 ( A ) , ( ~ ) ~ ( E ) , ( F ) , ( ~ ) , ( ~ ~ ~ ( I ~  
and (J) of Revenue 
Regulations No. 2-98 and any other applicable section(.$ ~f any Revenue 
Regulation(s): ~
~
Q
~
i
 
that the exemp 
lowed in Section62 of the 
Revenue Code shall 
apply and: pro 
further, that the return 
required by Section 65 of the Revenue Code shall not be required. 
* 13. 
- All withdrawals or early withdrawals are 
stor in the tax year in which the funds are 
taxed as mcome 
received. 
withdrawals before Retirement Age, s 
penalties and applicable taxes shall be first withh 
withdrawal. A penalty of ten percent (10%) shall be imposed on the total 
amount of any early withdrawal in addition to the amount of income tax 
that no penalty shall be imposed on any early 
the following purposes: 
a. used to pay for hospitalization in excess of one hundred and 
twenty (120) days in any one calendar year; 
b. for a Trustor or Contributor who has been determined to be 
~ disablig under Presidential Decree No. 442, as amended (The 
Labor Code of the Philippines), Republic Act No. 1161 as 
amended by Republic Act No. 8282, or Republic Act No. 8291 
(The Government Service Insurance System Act of 1997); 
c. used to pay for the first family home of the Trustor or 
Contributor; or 
d. used to pay for colled expenses of the Trustor or Contributor, 
his or her spouse or any children of the Trustor or Contributor. 
of a 
ot a 
- 
The TrusLe ‘r or 
Administrator shall keep records for all contributions, earnings, income 
and total account balances an6 shall be required to report to the Trustor 
or Contributor these amounts on a quarterly basis for each calendar 
year. 
Self-employed persons shall be allowed early withdrawal 
maximum of 50% of the balance of their account whether or 
penalty is imposed on the early withdrawal. 
b: . Distributions shall 
be made upon retirement of the Trustor or Contributor at Retirement 


&e. persons who pxrticiptte irr s"s1 employer sponsoreJ retirement pkmj 
may withdraw their assets from a PEW either in a lump sum or in 
installments avdetermined by the Trustor or Contributor. For self- 
employed persons, at least fifty percent (50%) of the assets in a SEP- 
PEM must be withdrawn in the form of a 
annuity with a minimum 
term of five (5) years. 
a. The Trustor ot" Contributor may terminate contributions to an 
account at any time: 
, that the asset8 of the PEM or 
SEP-PERA are deposited with a new 'l'rustee or hdm 
or remain with the existing Trustee or Administrator. 
b. A Trustor or Contributor may hold more than one P 
SEP-PERA with more than one ?kustee or Admi 
, tha$ the maximuni contribution limits are 
limits applicable to all PERAS or SEP-PERAS held by 
Trustor or Contributor. 
c. A Trustor or Contributor may not transfer assets from a PERA 
to a SEP-PERA or from a SEP-PEW to a PEW. 
. a  
~~~~~~ 
- No portion of the assets of a PEW or 
SEP-FERA may 
ed, alienated, pledged, attacked garnished, 
levied upon, seized or otherwise encumbered. PERA and SEP-PEW 
assets shall not be considered assets of the Trustor or Contributox for 
purposes of bankruptcy or estate taxes. 
- PERAS and SEP-PERc\s shall be under 
the jurisdiction of a newly created "PERA regulatory authority" composed 
of one representative, appointed by the head of each of the followirig 
which shall have the full authority to adopt, amend and rescind mles 
and regulations: 
a. Securities and Exchange Commission; 
b. Office of the Insurance Commission; 
c. Bangko Sentral ng Pilipinas; 
d. Bureau of Internal Revenue. 
And a Private Sector member appointed by the President of the 
Phillppbea upon-the recommendation of the Secretary of Finance. 
The PEW regulatory authority is hereby authorized to create a staff of 
qualified personnel. 
All decisions of the PERA regulatory shall be arrived at by majority vote. 
declared or found 
and effect. 
- If any provision of this Act is 
urt of competent jurisdiction, the 
other provisions not affected thereby shall remain valid and in 
~~~~~~ 
- All laws, decrees, orders, 
a. 
reQulntions or part thereof, inconsistent with this Act 
amended or modified accordingly. 


No law Ixeredter enacted shall repeal any of the provisions of this 
Act unless it is provided therein that the same is applicable to this Act by 
specifically stating its name and Section number(s). 
- This Act shall take effect fifteen (15) days 
following its publication in a newspaper of general circulation. 
Approved ~- 
."- 
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