Retirement: How much to save and where? The Philippine PERA Law

Months ago, I read about James Altucher’s advice on improving 1% each day on key areas of your life. Since I wanted to increase my financial literacy, I decided to do a weekly post on the topic. (I tried doing it daily, but it was just too much to add to my to-do list.)

I have heard about the importance of saving for retirement, but I know very little about it. For instance, how much should I save for retirement? Also, where should I put my money?

How Much to Save for Retirement

Eric Tyson, in his comprehensive book Personal Finance for Dummies, gave this rough formula for those who wish to maintain their pre-retirement standards of living.

  •  002057212-sml-165 percent of pre-retirement income if you are able to save at least 15 percent of your annual income; have your own home by retirement; and are a high-income earner
  • 75 percent of pre-retirement income if you are saving at least 5 percent of your annual income; may have to pay some rent or mortgage during retirement
  • 85 percent of pre-retirement income if you are saving less than 5 percent of your annual income, and have to pay significant rent or mortgage debts during retirement

Investing in Retirement Accounts

Tyson mentioned that one advantage of investing in a retirement account is the tax-exemption on earnings.

I did some research on retirement accounts in the Philippines and found out that we actually have the Personal Equity and Retirement Account (PERA) Law (Republic Act 9505), which was signed in 2008 by President Arroyo. PERA was finally launched last year, December 2016, at the Bangko Sentral ng Pilipinas.

Some information on PERA

Who can open a PERA account?

  • Filipinos 18 years old & above
  • Who earn an income (employed, self-employed, overseas Filipinos)
  • Has a tax identification number (TIN)

Advantages of PERA include:

  • 5% income tax credit on PERA contribution
  • Exemption from investment income tax
  • Not subject to estate tax (and can thus be used as an estate planning tool)

Maximum annual contribution:

  • Php100,000 for non-overseas Filipinos
  • Php200,000 for overseas Filipinos

Products where the PERA contributions can be invested in:

  • unit investment trust funds (UITFs), mutual funds, annuity contracts, insurance pension products, pre-need pension plans, shares of stocks or other securities, exchange-traded bonds, government securities, other investment products as permitted by the regulatory agency

When can the funds be withdrawn without being subject to penalties?

  • At 55 years old, provided the contributor has made at least 5 years of contribution
  • Upon death of contributor
  • If the contributor is still below 55 years old, withdrawals may be exempted from penalties if:
    • The funds are transferred to another PERA product.
    • The contributor is permanently disabled or hospitalized for more than 30 days.

Where to open a PERA account

  • From my research, there are two banks who are accredited PERA administrators: BPI and BDO.

Bank of the Philippine Islands (BPI) 

  • PERA products offered:
    • BPI PERA Money Market Fund
    • BPI PERA Equity Fund
    • BPI PERA Government Bond Fund
    • BPI PERA Corporate Income Fund


  • Where to open a PERA account (Check out the name, contact information of PERA individual administrators, and their schedules here.)
    • BPI Makati main branch
    • BPI Commonwealth
    • BPI Ermita branch
    • BPI Grace Park, 11th Ave
    • BPI Magallanes, South
    • BPI Batangas main
    • BPI Cagayan de Oro main
    • BPI Bocaue McArthur Highway


  • What to bring when opening an account
    • BPI savings/checking account
    • Valid government ID
    • TIN
    • TIN ID or any document to validate your TIN (ex., ITR)
    • P1,000 (initial amount, exclusive of fees)

Banco de Oro (BDO)

  • PERA products offered:
    • BDO PERA Short Term Fund
    • BDO PERA Bond Index Fund
    • BDO PERA Equity Index Fund


  • Requirements
    • TIN
    • Have attended the required BDO PERA seminar
    • BDO current or savings account
    • Photocopy of 2 valid IDs

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson



Note: This post also appears in my other blog. I copied it here as I wanted to dedicate a blog solely on finance.