BSP adds time deposits to PERA investment options

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has expanded the range of investment products available under the country’s voluntary retirement savings program to include time deposits, giving Filipinos a lower-risk and more familiar option for building retirement funds.

In a memorandum, the BSP said banks that meet applicable prudential requirements may offer time deposits under the Personal Equity and Retirement Account (PERA), alongside existing eligible products such as unit investment trust funds, stocks, real estate investment trusts and government securities.

A PERA time deposit will retain the legal form of a regular bank time deposit and remain subject to banking laws and prudential regulations, while its ownership, administration, tax treatment and withdrawal will also be governed by the PERA Act and related rules.

“Retirement planning should be simple, accessible and within reach of every Filipino,” BSP Deputy Governor Lyn Javier said in a statement.

“By introducing PERA time deposits, we are providing another practical option for individuals who want to build their retirement savings through a product they already understand and trust,” she said.

Unlike ordinary time deposits, placements made through PERA form part of a contributor’s retirement account and may qualify for applicable tax incentives.

The BSP said the new option could appeal particularly to savers looking for more predictable returns and relatively lower investment risk compared with market-linked instruments.

Banks will not be able to immediately offer PERA time deposits, however, as they must first comply with a series of regulatory requirements.

A bank must satisfy the BSP’s prudential criteria and notify the central bank of its PERA time deposit program within 10 banking days from board approval. The notification must include details on the program’s features, operating arrangements and target implementation date as well as certifications on compliance with applicable regulations.

The lender must also secure accreditation from the Bureau of Internal Revenue before accepting placements. Once the BSP determines that a bank’s submission is complete and compliant, it will transmit confirmation to the BIR within 15 banking days.

Banks are likewise required to enter into a written arrangement with at least one accredited PERA administrator, which will remain responsible for managing contributors’ accounts, monitoring contribution limits, maintaining PERA records and handling tax reporting.

Under the new framework, PERA time deposits must have a minimum maturity of 30 days. Upon maturity, the proceeds must remain within the contributor’s PERA and may be rolled over, transferred or reinvested in another accredited PERA product.

The maturity of the deposit itself will not be treated as a withdrawal from PERA. Similarly, pre-terminating a time deposit will not automatically constitute a withdrawal as long as the proceeds remain within the PERA and are reinvested or transferred in accordance with existing rules.

PERA time deposits will also remain covered by applicable Philippine Deposit Insurance Corp. deposit insurance rules.

The BSP said the expansion is part of efforts to encourage Filipinos to make retirement savings a regular part of financial planning and to select investments based on their financial goals, investment horizon and risk appetite.

PERA was established under Republic Act 9505 as a voluntary retirement savings program designed to supplement state and employer-based retirement benefits while providing tax incentives to encourage long-term savings.