Last week the Personal Equity and Retirement Act (Pera) was finally signed into law, after pending for several sessions of Congress.

Pera is a voluntary pension scheme that will encourage Filipinos to save more by providing tax credit to its contributors, equivalent to 5 percent of contribution, and tax exemption of its income and eventual distribution.

Pera supplements existing government pension schemes by catering to working people not covered by the Government Service Insurance System (GSIS) and Social Security System (SSS): the 8 million entrepreneurs and overseas Filipino workers (OFWs) currently without a retirement plan.

Apart from being a personal savings mechanism, we expect Pera’s impact to the economy to be more far-reaching. It has the potential to stimulate our country’s savings rate which is, at present, the lowest in the region. It can boost savings from the current 19 percent to 23 percent to 30 percent of our gross domestic product, bringing us closer to Southeast Asia’s average savings rate of 32.8 percent.

This increase in savings rate would, in turn, deepen the capital market in the country by making more money available for investments. Additional investment means more jobs for Filipinos and a wider tax base for the government.

To further mobilize savings, the Senate Committee on Banks and Financial Institutions, which I chair, has three other financial instruments on stream, further strengthening the financial system. These include the Preneed Code and the Credit Information System Act—both already passed by the Senate—and the Real Estate Investment Trust which I will soon sponsor this session.  

E-mail: edgardo_angara@hotmail.com. Web site: www.edangara.com.

Editorial: Chaff from the grain

A LOT of arguments have been made in recent weeks against the administration’s program for using cold cash as doles to the poorest of the poor, on the justification that they need help right now, when the twin tsunamis of high energy and high food prices are lashing the most marginalized everywhere.

Outside the Box: Short-term market predictions

By the time you read this, all of the following may have been proved true or completely wrong. However, one thing is for certain: the capital markets, including the Philippine Stock Exchange (PSE), gave short-term traders a wonderful and potentially profitable ride last week.

On Firm Ground: Advantages of international commercial arbitration

The effects of globalization and the efforts of the government and the private sector to attract more foreign investments into the country have caused an influx of international commercial transactions. This heightened interest of foreign investors in the country certainly benefits the economy and can be sustained by making our business climate more conducive.

Omerta: Lilian Hefti—‘attritable’

Under the Attrition Act of 2005 (Republic Act 9335), the two major revenue-raising agencies of the national government are effectively governed by a system of reward and punishment based on their collection performance.

Mirror on the wall: Raising money for government

Two of the most feared agencies of the government, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), were given up to the end of September to list down the most notorious among its personnel to dismiss them from the service.

Sen. Edgardo J. Angara: Mobilizing domestic savings for development

Last week the Personal Equity and Retirement Act (Pera) was finally signed into law, after pending for several sessions of Congress.

William Pesek: Hoping Nouriel Roubini is proven wrong

It’s hard to forget your first Nouriel Roubini experience.

Fifteen months ago, I watched an Asian Development Bank audience in Kyoto squirm and fidget as the chairman of Roubini Global Economics LLC gave his bleak, contrarian opinion that the global financial system was about to hit a wall.