Opening a Personal Equity and Retirement Account (PERA) in the Philippines requires careful selection of an administrator and investment products to ensure long-term retirement savings success. This article outlines the roles of key parties involved and types of eligible investments.
PERA is a retirement account structure offering tax benefits to encourage long-term saving. At its core is the contributor, who deposits money and selects investments. Three main parties are involved: the PERA administrator, custodian, and product provider.
The administrator, which could be a bank like BDO or BPI, trust corporation, insurance company, or broker such as DragonFi, manages the account, processes contributions, and provides updates. It must be accredited by the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), or Insurance Commission. The custodian, typically Landbank, safeguards assets separately to ensure checks and balances.
The product provider offers investments like PERA-specific Unit Investment Trust Funds (UITFs) from BDO or BPI. When choosing an administrator, consider ease of use—if you use a bank app, options from BDO, BPI, or Metrobank may reduce friction. For active stock traders, DragonFi provides an intuitive platform.
Be mindful of fees: setup or account fees, cash-custody charges including per-transaction costs with Landbank, annual administration fees as a percentage of account value, and investment-specific costs such as trust fees for UITFs or brokerage fees for stocks and REITs.
Investment choices should align with risk tolerance. Common options include money market funds (low risk, modest returns); government bond funds (low risk, subject to interest-rate fluctuations); corporate bond funds (higher yields, increased credit risk); equity funds (high risk, strong growth potential); equity index funds (track the PSEi, offering diversification); individual PSE Index stocks or Dividend Yield Index stocks (high risk, concentrated exposure); and REITs (dividend-focused, sensitive to interest rates and property markets).
Always conduct personal research to fully understand the products, risks, and fees before proceeding.