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Thursday, July 17, 2008

PERA Is Getting Closer!

The Philippines has one of the lowest savings rate for a nation. Poverty is a clear excuse but even those who are getting paid well seems to be not taking it seriously either. Based on this article, only one of out 10 Filipinos are preparing for retirement. That means, if I say that YOU have a low financial IQ, I have a 90% chance of being right. That's not a pretty sight.

Don't feel too down though. Senator Angara is trying to pass a bill called PERA (Personal Equity and Retirement Account) that will significantly improve the savings culture of Pinoys.

I'm crossing my fingers on this one.

PERA bill to hike savings rate, says lawmaker

MANILA, Philippines - The country’s savings rate is expected to increase once the bill allowing tax-free personal retirement accounts from taxes becomes law, a lawmaker said.

Senator Edgardo J. Angara said the country’s savings rate would go up to about 30% of gross domestic product (GDP) from 19-23%. He noted that the country’s savings rate is among the lowest in the region, with Malaysia, Singapore and Vietnam at 34-40% of GDP.

"[The Personal Equity and Retirement Account or PERA] is one of the best ways to accumulate savings. It will greatly augment Filipinos’ retirement plan," Mr. Angara told a briefing Friday.

The PERA bill was approved by a bicameral conference last June 10. Mr. Angara, who heads the Senate Committee on Banks, Financial Institutions and Currencies, said the law will likely take effect within the year after the Bangko Sentral ng Pilipinas and the Department of Finance come up with implementing rules.

PinoyMoneyTalk thread: Do we have a retirement plan like in the US called 401(k)?

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