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THE
Senate on Wednesday night passed on second reading the
Personal Equity and Retirement Account (Pera) Bill which
seeks to “create a more dependable and stable pension
that will ensure financial security during retirement.”
In
sponsoring its early approval, Sen. Edgardo Angara noted
that from January to July 2007, Filipino migrant workers
have remitted $8.1 billion to the economy. “While these
remittances fund immediate needs, a substantial part
should also be devoted to saving for one’s retirement,”
he said.
Angara,
who chairs the Senate Committee on Banks and Financial
Institutions, added that apart from migrant workers, the
lack of a dependable retirement plan is also true in the
case of the domestic labor force.
At the
same time, Sen. Loren Legarda, economic affairs
committee chairman, agreed to consider proposals to
provide overseas Filipino workers a fixed foreign
currency exchange rate, adding that its proponents would
be invited to upcoming Senate hearings on the surging
Philippine peso.
Legarda
acknowledged that while there are critics against this
proposal, “all aspects of the present rise in the value
of the Philippine peso vis-à-vis the US dollar will be
tabled for discussion.”
“We want
to hear all sides, more so since we will invite
financial experts and regulatory officials to attend the
hearings,” she said, noting that while the national
government was reported to have saved P24 billion in
interest payments owing to the rise of the peso, many
sectors are complaining of not feeling positive effects
from it.
She
pointed to a recent survey that said about 5 million
Filipinos are negatively affected by the increasing
strength of the peso against the dollar, including
migrant workers and their families, as well as
exporters.
In a
separate interview,
Angara said he
pushed for the passage of the Pera bill “with the goal
of attracting voluntary long-term savings for both
overseas and domestic labor force.”
Under
the Angara bill, an individual contributor may make a
total maximum annual contribution of P50,000 to his Pera
account.
He added
that contributions are required to be invested in a
qualified Pera investment product, which may be a unit
investment trust fund, mutual fund, annuity contract,
insurance or pension products, deposit product, preneed
pension plan, shares of stocks, exchange-traded bonds or
any other investment product or outlet. The
contributor, in turn, shall be given an income-tax
credit equivalent to 5 percent of the total Pera
contribution. Income from the contribution as well as
the eventual distribution of the Pera to the contributor
shall be tax-exempt.
“Fortunately, our fiscal position has considerably
improved since then. We now have the unparalleled
opportunity of offering tax-advantaged products which
will trigger a virtuous cycle of more savings,
especially during the retirement years of our
hardworking Filipinos,” he said.
He
pointed to a report from the National Statistics Office
indicating that the country has a labor force of about
35.81 million. Of the total labor force, only 78 percent
are members of government-initiated pension funds,
broken down as follows: 26.49 million for Social
Security System (SSS) and 1.4 million for Government
Service Insurance System (GSIS).
However,
he said, a separate World Bank study also showed that
the reserves of the government-run SSS and GSIS would
run out by years 2011 and 2040, respectively.
“This
means that about 7.92 million Filipinos, including their
dependents, will have nothing to look forward to in
their retirement years. Moreover, 70 percent of the
domestic work force is employed by micro, small and
medium enterprises that do not provide private
retirement-benefit plans for their employees,” said
Angara. |
