PERA: Tax-free, state-backed retirement account OFWs can use to secure their future

If you’re an overseas Filipino worker (OFW), you've probably spent years making sacrifices so your family can have a better future. 

Many OFWs hope their savings, investments or pension will be enough for retirement. 

But did you know there’s a tax-free retirement account that can help build your nest egg, one that’s state-backed and recommended by the country’s central bank (BSP)?

Here’s why it’s important: Given the rising living costs and longer life expectancies, relying on a single source of income may not be enough. 

That's why the Philippine government created the Personal Equity and Retirement Account (PERA) — a voluntary, government-backed retirement savings program that allows Filipinos to invest for the future while enjoying valuable tax incentives.

Although PERA has been available for years, it remains one of the country's most overlooked financial tools. 

Recent efforts by the Bangko Sentral ng Pilipinas (BSP) have made the program more accessible and increased contribution limits, giving OFWs even greater opportunities to build long-term wealth for retirement.

Here’s everything you need to know about PERA:

Despite its name, PERA is not the Philippine peso. It stands for Personal Equity and Retirement Account (created under RA 9505), a voluntary retirement savings program created by law to help Filipinos build long-term wealth beyond mandatory pension plans such as the Social Security System (SSS) and the Government Service Insurance System (GSIS).

The program allows eligible Filipinos to invest in Bangko Sentral ng Pilipinas (BSP)-accredited financial products while receiving tax incentives intended to encourage retirement savings.

Filipinos who are at least 18 years old, have a Tax Identification Number (TIN) and are legally capable of entering into a contract.

Contributors may maintain up to five PERA accounts.

PERA is designed to reward long-term investing. 

Among its benefits:

Tax-free investment earnings. Qualified income from PERA investments, including capital gains and dividends, is generally exempt from income, final withholding and capital gains taxes under the law.

A 5% tax credit: Contributors may claim a tax credit equivalent to 5% of their annual contributions, subject to the program's rules.

Estate tax advantages: PERA assets may be transferred to designated beneficiaries without estate tax, subject to applicable laws.

Protection from creditors. PERA assets receive legal protection against certain bankruptcy and insolvency proceedings.

Where can you open an account?

PERA accounts are offered through BSP-accredited administrators and participating financial institutions, including:

The investment products available may vary by provider and can include eligible funds, government securities and other BSP-accredited retirement investments.

PERA is the Philippines' version of a tax-advantaged retirement account: voluntary, portable and intended to supplement — not replace — government and employer-sponsored pensions.

For Filipinos planning for retirement, particularly self-employed workers and OFWs, it offers a structured way to invest for the long term while taking advantage of tax incentives provided under Philippine law.

The PERA can benefit overseas Filipino workers (OFWs) by providing a voluntary, tax-advantaged way to save and invest for retirement beyond government pension programmes.

Following are the reasons:

Builds long-term retirement savings: OFWs often earn more during their working years abroad but may not have employer-sponsored retirement plans. PERA allows them to set aside money specifically for retirement.

Offers tax incentives: This is a key feature: Qualified contributors receive tax benefits under the PERA law, helping maximise the value of their retirement savings.

Provides investment choices: PERA accounts can hold accredited investment products such as mutual funds, unit investment trust funds (UITFs), government securities, insurance pension products and exchange-traded bonds, allowing contributors to choose investments that match their financial goals and risk tolerance.

Supplements existing pensions: PERA is designed to complement, not replace, retirement benefits from the Social Security System (SSS), the Government Service Insurance System (GSIS) or employer-sponsored retirement plans.

Encourages disciplined saving: Because PERA is intended for retirement, it promotes consistent, long-term investing rather than short-term spending.

Accessible to eligible Filipinos, including those overseas: Qualified OFWs may open and contribute to a PERA account through accredited administrators and custodians, making it possible to continue building retirement savings while working abroad.

For OFWs who plan to return to the Philippines, PERA can serve as an additional source of retirement income and help strengthen long-term financial security.