Unlocking retirement security: How PERA and CMEPA empower Filipinos to save smarter

How prepared are you for retirement? For many Filipinos, saving for the future often takes a backseat to daily expenses. Recognizing this challenge, Republic Act 9505 or the Personal Equity and Retirement Account Act of 2008 was enacted to give Filipinos a tax-efficient option to build long-term financial security. PERA is a voluntary retirement savings account set up by individuals (contributors) for their exclusive use and benefit.

A contributor may open and maintain up to five PERA accounts at any given time, provided that only one administrator is designated to oversee all accounts. A contributor, who is a non-Overseas Filipino, may contribute up to P200,000 annually, while an overseas Filipino may contribute up to P400,000 per year. The Act establishes a legal framework that promotes financial security by encouraging Filipinos to build their own retirement savings through voluntary contributions.

To make the program even more attractive, the Bureau of Internal Revenue (BIR) issued Revenue Regulations 22-2025 to implement Section 9 of Republic Act 12214, otherwise known as the Capital Markets Efficiency Promotion Act. The CMEPA provides an additional deduction of qualified employer contributions pursuant to the PERA Act. An employer may claim the actual amount of its contribution to the PERA as a deduction from its gross income, but only to the extent that the contribution completes the employee’s maximum allowable PERA contribution for the year. In line with the provisions of the CMEPA, private employers are further entitled to an additional deduction equivalent to 50 percent of the amount voluntary contributed, further reducing their taxable gross income if they satisfy the following conditions:

1. They contribute an amount at least equal to the contributions of their employees, subject to the maximum allowable contribution; and

2. They contribute to all of their employees’ PERA.

Furthermore, to qualify for an additional 50 percent deduction, employees must make their own contributions to their PERA within the same calendar year.

The CMEPA transforms PERA into more than just an individual savings tool. It makes retirement planning a shared responsibility between employees and employers. For employees, it promotes disciplined, long-term saving and encourages them to take control of their retirement future. With contributions coming from both the employee and the employer, retirement funds can grow more rapidly and sustainably.

For employers, PERA offers structured tax incentives, including an additional 50 percent deduction from gross income and exemption from withholding tax on compensation, while also demonstrating a strong commitment to employee welfare. Moreover, PERA contributes to the development of the capital markets by transforming long-term savings into investments, as PERA funds may be allocated to a range of investment products such as unit investment trust funds, mutual funds, shares of stock, and other securities. CMEPA transforms PERA into a collaborative effort between employees and employers, making retirement savings and planning more accessible, sustainable and tax efficient.

Kristina Pauline Gutierrez is an associate from the Tax Group of R.G. Manabat & Co. (KPMG in the Philippines), a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The firm has been recognized as a Tier 1 in Transfer Pricing Practice and in General Corporate Tax Practice by the International Tax Review. For more information, you may reach out to Kristina Pauline Gutierrez or Manuel P. Salvador III through [email protected], social media or visit www.home.kpmg/ph.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. The views and opinions expressed herein are those of the author and do not necessarily represent KPMG International or KPMG in the Philippines.