The Securities and Exchange Commission (SEC) believes more Filipinos will invest in retirement savings through Personal Equity and Retirement Account (PERA) products because of a new tax cut for employers who help their workers save for retirement.

Under the Capital Markets Efficiency Promotion Act (CMEPA), employers who contribute the same amount or more than their employees to a PERA account can enjoy an additional 50% tax deduction. CMEPA also standardizes the tax on interest earned from savings and deposit accounts at 20%.

What is PERA?


PERA was created under the PERA Act of 2008 (Republic Act 9505). It is a voluntary retirement savings program, meaning you are not required to join or contribute, unlike the mandatory pension programs such as SSS (for private workers) or GSIS (for government employees). PERA is an extra way for Filipinos to save for retirement, with added benefits and flexibility.

How does CMEPA help?


SEC Chair Francis Lim explained that CMEPA gives stronger incentives for long-term savings and retirement planning. It encourages companies to help their employees build their retirement funds while also increasing the money flowing into the Philippine stock market and financial system.

“At it’s core, CMEPA is designed to align the Philippine capital markets more closely with regional peers by removing longstanding barriers to investor participation. This supports the Commission’s mission to continue introducing reforms that will increase the local market’s competitiveness,” Lim said.

CMEPA will modernize the financial markets in the country to match other countries in the region and make it easier for Filipinos to invest.

Other benefits of CMEPA:

A fixed 20% tax rate on all interest income from savings accounts, no matter the maturity period.
The stock transaction tax (STT) was reduced to 0.1% (from 0.6%), making it cheaper to buy and sell stocks.
The documentary stamp tax (DST) on newly issued shares of stock was lowered to 0.75% (from 1% of par value). This benefits companies planning to raise money through initial public offerings (IPOs) or additional stock sales.