EXPLAINER: Why PERA may be the retirement investment you’ve been overlooking

PERA is an investment account built to financially prepare you for retirement.

Every payday, it’s tempting to focus only on the present. Bills need to be paid, groceries can’t wait, and there’s always something else competing for your money. Retirement, for many Filipinos, feels like a problem for another day.

But what if there was an investment designed specifically to help you retire more comfortably—while rewarding you with tax perks along the way?

That’s exactly what the Personal Equity and Retirement Account (PERA) was created to do.

Established under Republic Act No. 9505, PERA is the Philippine government’s voluntary retirement savings and investment program. Think of it as your personal retirement fund that works alongside—not instead of—your SSS or GSIS pension. Instead of relying solely on mandatory contributions, you build your own nest egg that can continue growing over the years.

What exactly is PERA?

Unlike a regular savings account, PERA is an investment account built for one purpose: helping you prepare financially for retirement.

You voluntarily contribute money, then choose where it will be invested based on your financial goals and risk tolerance. Over the years, your money has the opportunity to grow through investments while enjoying tax advantages that ordinary investment accounts don’t provide.

A 5% tax bonus every year

One of PERA’s biggest advantages is the annual tax credit.

Every contribution earns a tax credit worth 5% of the amount you invested, which can directly reduce your income tax liability.

Local employees and self-employed individuals may contribute up to ₱200,000 annually, allowing them to receive as much as ₱10,000 in tax credits every year.

Overseas Filipino workers can contribute up to ₱400,000 annually and receive tax credits of up to ₱20,000.

Your investment grows tax-free

One reason long-term investing works is compounding—earning returns on your previous earnings.

PERA gives this an extra boost because qualified investment gains, dividends, and interest are generally exempt from taxes. Instead of losing part of your returns to taxes each year, more of your earnings stay invested, allowing your retirement fund to grow faster over time.

You can withdraw it tax-free

Patience is rewarded under PERA.

Once you reach 55 years old and have contributed for at least five years—known as the “55 and 5” rule—you may withdraw your entire PERA fund tax-free.

You may receive it as one lump sum or convert it into regular retirement income.

Your retirement fund is protected

PERA also offers legal safeguards.

Your retirement assets are generally protected from creditors in bankruptcy proceedings. If something happens to you, your PERA assets may also be transferred to your beneficiaries without being subjected to estate tax.

Where is your money invested?

PERA isn’t simply parked in a bank account.

Accredited administrators such as BDO, BPI Wealth, UnionBank, and digital platforms like DragonFi invest your contributions in government-approved products such as government bonds, money market funds, balanced funds, equity funds, REITs, and other eligible investments.

The investment choices depend on how much risk you’re comfortable taking.

The one thing to remember

Because PERA is designed for retirement, it’s not meant for emergency spending.

If you withdraw your money before meeting the required retirement conditions, you’ll generally have to return the tax benefits you received and pay the taxes that had previously been waived. Exceptions apply only in limited circumstances, such as permanent disability or prolonged hospitalization.

A retirement fund you build yourself

Many Filipinos hope that their SSS or GSIS pension will be enough. For some, it may not be.

PERA was created to give every Filipino another way to prepare for the future—one where your retirement savings can grow through investments while enjoying incentives that are difficult to find elsewhere.

Retirement may seem far away today. But the earlier you start building it, the more time your money has to work for you.

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