Republic Act No. 9505

7/25/2019 Republic Act No. 9505

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Republic Act No. 9505

August 22, 2008

AN ACT ESTABLISHING A R!"I#ENT ERS!NALSA"INGS LAN, $N!%N AS THE ERS!NAL E&'IT( AN# RETIRE)ENT ACC!'NT *ERA+

Be it enacted by the Senate and House of Representatives of the Philippines in Congressassembled::

SECTI!N . Title. - This Act shall be known asthe -Personal Equity and Retirement Account (PERA) Act of 2008-.

SEC. 2. Declaration of Policy . - It is declared the policyof the State to promote capital market development andsavings mobilization by establishing a legal andregulatory framework of retirement plans for personscomprised of voluntary personal savings andinvestments. The State recognizes the potentialcontribution of !"#A to long-term $scal sustainabilitythrough the provision of long-term $nancing andreduction of social pension bene$ts.

SEC. . Denition of Terms. -%nless the conte&tre'uires otherwise the following terms shall have thefollowing signi$cance as used in this Act:

(a) *Administrator* is an entity accredited by the+ureau of Internal #evenue (+I#) after pre-'uali$cation by the concerned #egulatoryAuthority. The Administrator shall be responsiblefor overseeing the !"#A whose core functionsshall include but not limited to: reporting on

contributions made to the account computing thevalues of investments educating the ,ontributorenforcing !"#A contributions and withdrawallimits collecting appropriate ta&es and penalties

for the government securing +I# Income Ta&,redit ,erti$cates for the ,ontributorconsolidating reports on all investments incomee&penses and withdrawals on the account andensuring that !"#A contributions are invested inaccordance with the prudential guidelines set bythe #egulatory Authorities.

(b) *,ontributor* is any person with the capacity tocontract and possesses a ta& identi$cationnumber. The ,ontributor establishes and makes

contributions to a !"#A.

(c) *,ustodian* is a separate and distinct entityunrelated to the Administrator accredited by the+angko Sentral ng !ilipinas providing services inconnection with the custodianship of funds andsecurities comprising the !"#A investments. The,ustodian shall be responsible for receiving allfunds in connection with the !"#A maintainingcustody of all original securities evidence of deposits or other evidence of investment. The

,ustodian shall operate independently from theAdministrator. The ,ustodian is re'uired to reportto the ,ontributor and the concerned #egulatoryAuthority at regular intervals all $nancialtransactions and all documents in its custodyunder a !"#A.

(d) *"arly withdrawal* shall pertain to anywithdrawal prior to the period of distribution as setforth under Section hereof.



(e) *Investment /anager* is a regulated person orentity authorized by a ,ontributor to makeinvestment decisions for his !"#A. As such it shallassume $duciary duty and responsibility for !"#Ainvestments. An Investment /anager shall act

with utmost $delity by observing policies directedtowards con$dentiality scrupulous care safetyand prudent management of !"#A funds.

(f) *!ersonal "'uity and #etirement Account(!"#A)* refers to the voluntary retirement accountestablished by and for the e&clusive use andbene$t of the ,ontributor for the purpose of beinginvested solely in !"#A investment products in the!hilippines. The ,ontributor shall retain theownership whether legal or bene$cial of funds

placed therein including all earnings of suchfunds.

(g) *!"#A Investment !roduct* refers to a unitinvestment bust fund mutual fund annuitycontract insurance pension products pre-needpension plan shares of stock and other securitieslisted and traded in a local e&change e&change-traded bonds or any other investment product oroutlet which the concerned #egulatory Authoritymay allow for !"#A purposes: Provided however

That to 'ualify as a !"#A investment productunder this Act the product must be non-speculative readily marketable and with a trackrecord of regular income payments to investors. The concerned #egulatory Authority must $rstapprove the product before being granted ta&-e&empt privileges by the +I#.

(h) *#egulatory Authority* refers to the +angkoSentral ng !ilipinas (+S!) as regards banks other

supervised $nancial institutions and trust entitiesthe Securities and "&change ,ommission (S",) forinvestment companies investment housesstockbrokerages and pre-need plan companiesand the 01ce of the Insurance ,ommission (0I,)

for insurance companies.

(i) *0veseas 2ilipino* refers to () an individualcitizen of the !hilippines who is working orderiving income from abroad including one whoretained or reac'uired his !hilippine citizenshipunder #epublic Act 3o. 45 otherwise known asthe *,itizenship #etention and #eac'uisition Act of 667*8 or () the legitimate spouse whether or notsaid spouse is of 2ilipino ancestry and the childrenof the 2ilipino citizen mentioned in item () hereof.

SEC. /. Establishment of a PERA. - A ,ontributor maycreate and maintain a ma&imum of $ve (5) !"#A at anyone time: Provided That the ,ontributor shall designateand maintain only one () Administrator for all his !"#A. The ,ontributor shall make all investment decisionspertaining to his !"#A. 9owever he has the option of appointing an Investment /anager either in writing or inelectronic form to make investment decisions on hisbehalf without prior consultation.

SEC. 5. a!imum Annual PERA "ontributions. - A,ontributor may make an aggregate ma&imumcontribution of 0ne hundred thousand pesos (!l66666.66) or its e'uivalent in any convertible foreigncurrency at the prevailing rate at the time of the actualcontribution to his her !"#A per year: Provided That if the ,ontributor is married each of the spouses shall beentitled to make a ma&imum contribution of 0ne hundredthousand pesos (! l66666.66) or its e'uivalent in anyconvertible foreign currency per year to his her



respective !"#A: Provided further That if the ,ontributoris an overseas 2ilipino he shall be allowed to makema&imum contributions double the allowable ma&imumamount. A ,ontributor has the option to contribute morethan the ma&imum amount prescribed herein: Provided

That the e&cess shall no longer be entitled to a ta& creditof $ve percent (5). The Secretary of 2inance may ad;ustthe ma&imum contribution from time to time taking intoconsideration the present value of the said ma&imumcontribution using the ,onsumer !rice Inde& as publishedby the 3ational Statistics 01ce $scal position of thegovernment and other pertinent factors.

SEC. . Em#loyer$s "ontribution. - A private employermay contribute to its employee<s !"#A to the e&tent of the amount allowable to the

,ontributor: Provided however : That the employercomplies with the mandatory Social Security System(SSS) contribution and retirement pay under the =abor,ode of the !hilippines. Such contribution shall beallowed as a deduction from the employer<s grossincome. The ,ontributor however retains theprerogative to make investment decisions pertaining tohis !"#A.

SEC. 1. %e#arate Asset . -The !"#A shall be keptseparate from the other assets of an

Administrator>,ustodian and shall not be part of thegeneral assets of the Administrator>,ustodian forpurposes of insolvency.

SEC. 8. Ta! Treatment of "ontributions. - The,ontributor shall be given an income ta& credite'uivalent to $ve percent (5) of the total !"#Acontribution: Provided however : That in no instance canthere be any refund of the said ta& credit arising from the!"#A contributions. If the ,ontributor is an overseas

2ilipino he shall be entitled to claim ta& credit from anyta& payable to the national government under the3ational Internal #evenue ,ode of 44? as amended.

SEC. 9. Ta! Treatment of &n'estment &ncome. - All

income earned from the investments and reinvestmentsof the ma&imum amount allowed herein is ta& e&empt.

SEC. 0. Ta! Treatment of Distributions. - Alldistributions in accordance with Section hereof are ta&e&empt.

SEC. . Termination. -Any premature termination shallbe treated as an early withdrawal under Section 7hereof: Provided That the penalties thereunder shall notapply if the entire proceeds there from are immediately

transferred to another !"#A investment and>or anotherAdministrator.

SEC. 2. Distributions #on RetirementDeath. -@istributions may be made upon reaching the age of $fty-$ve (55) years: Provided That the ,ontributor has madecontributions to the !"#A for at least $ve (5) years. Thedistribution shall be made in either lump sum or pensionfor a de$nite period or lifetime pension the choice of which shall be at the option of the ,ontributor. The,ontributor however has the option to continue the

!"#A. ,omplete distribution shall be made upon thedeath of the ,ontributor irrespective of the age of the,ontributor at the time of his death.

SEC. . Penalty on Early *ithdra+al . - Any earlywithdrawal shall be sub;ect to a penalty the amount of which would be determined by the Secretary of 2inanceand payable to the government: Provided That theamount of the penalty shall in no case be less than theta& incentives en;oyed by the ,ontributor.



3o early withdrawal penalty shall be imposed on anywithdrawal of any funds for the following purposes:

(a) 2or payment of accident or illness-relatedhospitalization in e&cess of thirty (76) days8 and

(b) 2or payment to a ,ontributor who has beensubse'uently rendered permanently totallydisabled as de$ned under the "mployees,ompensation =aw Social Security =aw andovernment Service Insurance System =aw.

SEC. /. ,on-Assi.nability . - 3o portion of the assetsof a !"#A may be assigned alienated pledgedencumbered attached garnished seized or levied upon.!"#A assets shall not be considered assets of the

,ontributor for purposes of insolvency and estate ta&es.

SEC. 5. Rules and Re.ulations. - ,onsistent with thepolicy of promoting transparency in !"#A investment andthereby aBording protection to the ,ontributor the@epartment of 2inance the +ureau of Internal #evenueand the concerned #egulatory Authorities with the+angko Sentral ng !ilipinas as lead agency shallcoordinate to establish uniform rules and regulationspertaining to the following sub;ect matters:

(a) Cuali$cation and dis'uali$cation standards forAdministrators ,ustodians and Investment/anagers including directors and o1cers thereof8

(b) Cuali$ed and>or eligible !"#A investmentproducts8

(c) Daluation standards for !"#A investments8

(d) @isclosure re'uirements on the terms andconditions of the !"#A investments8

(e) /inimum re'uirements imposed on theAdministrators as regards inculcating $nancial

literacy in investors8

(f) Ascertainment of client suitability for !"#Aproducts8

(g) 2ees to be charged by the Administrator,ustodian or Investment /anager shall always bereasonable and approved by the concerned#egulatory Authority8

(h) #ecord-keeping reporting and audit

re'uirement of Administrators and ,ustodianspertaining to records for all contributions earningsand total account balances8 and

(i) 0ther pertinent matters to be determined bythe #egulatory Authorities.

SEC. . Administration of Ta! &ncenti'es. - The +I#shall issue the implementing rules and regulationsregarding all aspects of ta& administration relating to!"#A. The +I# shall coordinate the 'uali$cation standards

of the Administrator with the #egulatory Authorities.

SEC. 1. Penalty . - A $ne of not less than 2ifty thousandpesos (! 56666.66) nor more than Two hundredthousand pesos (! 66666.66) or imprisonment of notless than si& (E) years and one () day to not more thantwelve () years or both such $ne and imprisonment atthe discretion of the court shall be imposed upon anyperson association partnership or corporation its o1cer



employee or agent who acting alone or in connivancewith others shall:

(a) Act as Administrator ,ustodian or Investment/anager without being properly 'uali$ed or

without being granted prior accreditation by theconcerned #egulatory Authority8

(b) Invest the contribution without written orelectronically authenticated authority from the,ontributor or invest the contribution incontravention of the instructions of the,ontributor8

(c) Fnowingly and willfully make any statement inany application report or document re'uired to

be $led under this Act which statement is false ormisleading with respect to any material fact8

(d) /isappropriate or convert to the pre;udice of the ,ontributor contributions to and investmentsor income from the !"#A8

(e) +y gross negligence cause any lossconversion or misappropriation of thecontributions to or investments from the !"#A or

(f) Diolate any provision of this Act or rules andregulations issued pursuant to this Act.3otwithstanding the foregoing any willful violationby the accredited Administrator ,ustodian orInvestment /anager of any of the provisions of this Act or its implementing rules and regulationsor other terms and conditions of the authority to

act as Administrator ,ustodian or Investment/anager may be sub;ect to the administrativesanctions provided for in applicable laws. Theabove penalties shall be without pre;udice towhatever civil and criminal liability provided for

under applicable laws for the same act oromission.

SEC. 8. Abuse of the Ta! E!em#tion and Pri'ile.es. - Any person natural or ;uridical who undulyavails of the ta& e&emption privileges herein grantedpossibly by co-mingling !"#A accounts in an investmentwith other investments when such person is not entitledhereto shall be sub;ect to the penalties provided inSection ? hereof. In addition the oBender shall refund tothe government double the amount of the ta&

e&emptions and privileges en;oyed under this Act plusinterest of twelve percent () per year from the dateof en;oyment of the ta& e&emptions and privileges to thedate of actual payment.

SEC. 9. %e#arability "lause. - If any provision or parthereof is held invalid or unconstitutional the remainderof the law or the provision not otherwise aBected shallremain valid and subsisting.

SEC. 20. Re#ealin. "lause. - All laws decrees orders

rules and regulations or parts thereof inconsistent withthis Act are hereby amended or modi$ed accordingly.

SEC. 2. E/ecti'ity . -This Act shall take eBect $fteen(5) days following its publication in a newspaper of general circulation: Provided That the ta& incentivesgranted hereunder shall take eBect on Ganuary 664.

Documents

Republic Act No. 9505