PERA Explained: Filipino Retirement Account Guide

PERA Explained: Filipino Retirement Account Guide

PERA (Personal Equity and Retirement Account) is one of the Philippines' most underused ways to save for retirement. It's a voluntary, tax-advantaged account, loosely similar to a US IRA. Here's the full picture.

The rules below follow the Bangko Sentral ng Pilipinas (BSP) PERA pages. Check bsp.gov.ph for the latest before you open an account.

What it is

PERA is:

• A voluntary retirement savings account
• Tax-advantaged when you contribute, while it grows and when you withdraw
• Created by the PERA Act of 2008 (RA 9505)
• Run through an accredited PERA Administrator, which holds your account and invests it in PERA-approved products

Tax benefits

A 5% tax credit on what you put in

You get a tax credit of 5% of your contributions for the year:

• Contribute ₱100,000 and get a ₱5,000 tax credit
• Contribute the resident maximum of ₱200,000 and get ₱10,000
• A tax credit cuts your tax bill peso for peso, which is worth more than a deduction that only lowers taxable income

Tax-free investment income

Income earned inside your PERA, within the contribution limits, is exempt from taxes on investment income. Outside PERA, you'd normally pay a 20% final tax on interest income and a 10% final tax on cash dividends.

Tax-free withdrawal at retirement

If you meet the 55-and-5 rule (you're at least 55 and have contributed for at least 5 years), you can withdraw tax-free, as a lump sum or in installments like a pension.

Contribution limits

Yearly maximum

• ₱200,000 a year for contributors in the Philippines
• ₱400,000 a year for overseas Filipinos
• Married couples each have their own limit

These are higher than the ₱100,000 and ₱200,000 limits you may still see in older articles.

Employer contributions

Private employers can contribute to their employees' PERAs, within the same limit. Under the Capital Markets Efficiency Promotion Act (RA 12214), effective July 1, 2025, employers that match their employees' PERA contributions get an extra tax deduction of 50% of what they put in.

Account structure

You choose one Administrator, and within your PERA you can hold up to five product categories.

Eligibility

Who can open a PERA

• Anyone at least 18 years old
• With a TIN
• Employed, self-employed, a freelancer or an overseas Filipino

What you'll need

• Your TIN
• A valid government ID
• The Administrator's forms, plus any other documents it asks for
• An initial contribution (minimums depend on the Administrator and product)

Investment options

PERA-approved products include

• PERA unit investment trust funds (UITFs)
• PERA mutual funds
• Government securities
• Listed stocks and bonds
• Some annuity and insurance products

The exact menu depends on your Administrator.

Matching investments to your age

A general guide, not a rule:

Younger (20s to 30s):

• Mostly equity funds
• Some bond funds
• A long horizon can ride out ups and downs

Middle (40s):

• A balance of equity and bond or balanced funds
• Moderate risk

Nearing withdrawal (50s):

• More bonds and money market funds
• Lower risk, protecting what you've built

Administrators

Accredited PERA Administrators

The BSP lists these PERA Administrators:

• ATRAM Trust Corporation
• BDO Unibank, Inc.
• BPI Asset Management and Trust Corporation
• DragonFi Securities, Inc.
• Luna Securities, Inc.
• E.M. Zalamea Actuarial Services, Inc. (accredited; operations not yet started)

The list changes, so check the BSP's PERA page for the current one.

Choosing an Administrator

Compare:

• Available funds and products
• Fees
• The app or online account
• Customer service
• Minimum contribution

For most people the differences are small. Pick one with products you want and an interface you'll actually use.

How to open one

Step 1: Choose an Administrator

Compare products, fees and minimums.

Step 2: Apply

Online or at a branch:

• Application form
• TIN and ID
• First contribution

Step 3: Contribute

• A lump sum or regular deposits
• Stay within the yearly limit
• Keep a record of what you put in

Step 4: Choose investments

• Pick your initial mix of products
• You can rebalance later
• Most Administrators let you switch online

Step 5: Get your tax credit

The tax credit comes as a Tax Credit Certificate based on your qualified contributions for the year. Ask your Administrator how and when it processes the claim, and keep your statements.

Withdrawal rules

Qualified withdrawal (the 55-and-5 rule)

• At age 55 or older, after at least 5 years of contributions
• Tax-free
• Lump sum or installments

Early withdrawal

• Allowed, but all the taxes waived in your favor must be repaid, including the tax credits you received
• No penalty applies for hospitalization of more than 30 days due to accident or illness, permanent total disability, or a transfer to another PERA product or Administrator within 15 days

Avoid early withdrawal. It undoes the point of PERA.

If the contributor dies

Your PERA passes to your heirs. Ask your Administrator how beneficiaries claim it.

Who should open a PERA

Worth it for

• Salary earners with steady income
• Self-employed professionals
• OFWs, who have the higher ₱400,000 limit
• Anyone with savings left after their emergency fund

Less urgent for

• People on very low income (build an emergency fund first)
• People facing a big expense soon

What it can add up to

These are illustrations, not promises. Returns aren't guaranteed and can be lower or negative in some years.

₱100,000 a year

₱100,000 a year for 30 years, growing at 8% a year, would be about ₱11.3 million. You'd have put in ₱3 million.

₱30,000 a year

₱30,000 a year for 30 years at 8% would be about ₱3.4 million. At 5%, about ₱2 million. Either way, you'd have put in ₱900,000.

Even modest amounts grow a lot over decades.

Compared with investing outside PERA

The same investments outside PERA:

• Pay a 20% final tax on interest and a 10% final tax on cash dividends
• Get no tax credit on contributions

Over decades, those tax savings add up.

Common mistakes

Never opening one

Many Filipinos haven't heard of PERA, and miss years of tax credits and tax-free growth.

Being too conservative when young

If you're 25 to 35 with decades to go, keeping everything in money market funds limits growth.

Forgetting the tax credit

Keep your records and follow up with your Administrator on the Tax Credit Certificate.

Staying with a poor fit

If your Administrator's products don't suit you, you can transfer to another one. Transfers made within 15 days don't trigger penalties.

PERA before an emergency fund

Build the emergency fund first, then PERA.

Treating it as short-term money

PERA is for retirement. Early withdrawals cost you the tax benefits.

PERA vs other retirement options

vs SSS

SSS is mandatory and gives a basic pension. PERA is a voluntary top-up. Both matter.

vs regular investing

PERA gets tax advantages that regular investing doesn't. You can use both.

vs property

Property: harder to sell, needs more capital, but can be financed. PERA: a financial investment that's easier to access after 55.

Many retirees use both.

vs an employer retirement plan

Some employers have their own retirement plans. Your PERA stays with you when you change jobs.

Making the most of it

Contribute what you can

₱200,000 a year is the resident limit. If that's out of reach, set a monthly amount you can keep up.

Automate it

A monthly auto-debit removes the need for willpower.

Raise it with your salary

When you get a raise, raise your contribution.

Use bonuses

13th month pay and bonuses can top up your PERA.

Rebalance once a year

Review your mix every year and rebalance if it has drifted far from your target.

Where Super Tutor fits

Super Tutor is a reviewer app for Philippine exams. If you're preparing for one, see every exam Super Tutor covers.

What to read next

• Filipino stock investing for beginners
• Financial literacy for new Filipino professionals

Sources: BSP PERA FAQs and tax credit FAQs (bsp.gov.ph/Pages/InclusiveFinance/PERA_FAQs1.aspx, PERA_FAQs_TaxCredit.aspx); BSP list of PERA participants (bsp.gov.ph/Pages/InclusiveFinance/PERA_Participants.aspx); Capital Markets Efficiency Promotion Act (RA 12214), effective July 1, 2025.