Implementing Rules and Regulations of Republic Act No. 9505

March 2, 2020

2019 RULES AND REGULATIONS IMPLEMENTING THE PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA) ACT OF 2008 n (2019 PERA RULES)

Pursuant to agreement amongst the Bangko Sentral ng Pilipinas, Bureau of Internal Revenue, Department of Finance, Office of the Insurance Commission and Securities and Exchange Commission, the following amendments to the PERA Rules are approved and issued, to wit:

PERA Rule 3 — Definition of Terms used in the PERA Rules.

As used in these PERA Rules, unless the context requires otherwise, the following terms shall have the following meanings:

(c) "Custodian" is a separate and distinct entity unrelated to the Administrator, accredited by the BSP to take custody of the PERA Assets. The Custodian, which shall operate independently from the Administrator, shall be chosen by the Contributor. The Bangko Sentral ng Pilipinas (BSP) shall impose such accreditation requirements for PERA Custodians as it may deem necessary or appropriate.

PERA Custodians may be classified as cash custodians and securities custodians. The cash custodian shall maintain custody of all funds in connection with the PERA. The securities custodian shall maintain custody of all securities, evidence of deposits or other evidence of investment. An entity may act as cash and securities custodian at the same time provided such entity is accredited by the BSP under PERA Rules 4.C.1.a and 4.C.1.b.

A Contributor, however, may be considered as a securities custodian under a self-custody arrangement for certain PERA products, which are identified by the Concerned Regulatory Authority to be non-transferable, non-negotiable and non-withdrawable. A Contributor may be considered as a Cash Custodian under a self-custody arrangement of his PERA contributions and income thereof which shall be non-transferable except for the instances set forth in these Rules. Any movement of securities and cash under a self-custody arrangement shall be coursed through the Administrator.

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PERA Rule 4 — PERA Market Participants: Administrator, Investment Manager and Custodian.

PERA Rule 4.A — Administrator. x x x

1. Entities eligible to act as Administrators

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2. Pre-qualification requirements for the Administrator

The Concerned Regulatory Authority shall issue a Qualification Certificate to the applicant upon its compliance with the following requirements:

(a) The applicant shall have a net worth of at least One Hundred Million Pesos (Php100,000,000.00).

Net worth shall refer to the capital accounts of the Administrator which shall mean the total of the unimpaired paid-in capital, surplus and undivided profits, net of the required basic security deposit and other adjustments as may be prescribed by the Concerned Regulatory Authority.

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3. BIR Accreditation Requirements for Administrator

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4. Core Functions of the Administrator

An entity shall perform the following in its role as a PERA Administrator:

a. educating and inculcating financial literacy in the Contributor;

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i. applying for BIR Income Tax Certificate on behalf of the Contributor;

j. ensuring that appropriate taxes and penalties relative to PERA are paid to the Government; and

k. keeping and consolidating records of all contributions, investments, earnings, expenses and withdrawals from the PERA and the valuations of the PERA assets, and making regular reports thereon to the Contributor and the Concerned Regulatory Authority on a regular basis or upon the Contributor or Concerned Regulatory Authority's request.

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5. Security for the Faithful Performance of Administrator's Duties

As a security for the faithful performance of its duties under the PERA Act of 2008, an Administrator shall hold government securities, equivalent to an amount as may be prescribed by the Concerned Regulatory Authority. Such securities shall be earmarked in favor of the Regulatory Authority; provided that the Administrator shall issue an authorization in favor of the respective Regulatory Authority to withdraw, dispose and disburse the proceeds thereof to settle any claims arising from the breach of its duties as evidenced by a final and executory court order; Provided, further that the Administrator shall not withdraw, transfer of replace such earmarked securities without prior written instruction from the Concerned Regulatory Authority; and provided finally that the Regulatory Authority shall determine the terms of the government securities eligible for such purpose. The security for the faithful performance of Administrator functions shall be in addition to and shall be treated separately from the capital, surplus and undivided profits of the Administrator.

The Concerned Regulatory Authority shall issue regulations/guidelines on the required basic security deposit.

PERA Rule 4.B — Investment Manager.

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PERA Rule 4.C — Custodian.

1. Accreditation Requirements

a. Cash Custodian

Banks applying for authority to act as cash custodian for PERA shall comply with the accreditation requirements as may be prescribed by the Bangko Sentral.

b. Securities Custodian

Only banks and other entities with trust license which have complied with the requirements prescribed by the Bangko Sentral may be accredited as securities custodian.

The BSP may issue from time to time rules and regulations on the accreditation requirements for cash and securities custodian, including self-custody arrangements.

The Contributor acting as custodian under a self-custody arrangement shall no longer be subject to the foregoing accreditation requirements.

2. Core Functions of a Custodian

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PERA Rule 4.E — Duties of the Administrator, Investment Manager or Custodian in the Event of Suspension or Revocation of their Accreditation.

1. Common Provisions to Administrator, Investment Manager and Custodian

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2. Administrator

In case of a revocation of the Administrator's qualification, the Administrator shall effect the transfer of Contributor's PERA Assets to the new Administrator of the Contributor's choice, within 15 calendar days from receipt of Contributor's advice on the chosen Administrator.

In case of a suspension of the Administrator's qualification, the Contributor may opt to transfer his PERA to a new Administrator and the suspended Administrator shall effect the transfer of the PERA assets to the new Administrator within 15 calendar days from receipt of Contributor's advice on the chosen Administrator.

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PERA Rule 6 — Establishment and Administration of PERA.

PERA Rule 6.A — Establishment of PERA.

1. x x x

2. The Administrator must observe the following standards in the establishment of a PERA:

a. Pre-Acceptance Disclosure

The Administrator shall disclose to the potential Contributor the following:

1) The nature of a PERA, the privileges and conditions of its establishment; emphasis must be placed on the long-term nature of PERA, the conditions for tax exemption and penalties for early withdrawal unless the early withdrawal is allowed under the exceptions provided in the PERA Act of 2008;

2) The category and classification of PERA Investment Products available to a Contributor;

3) The risk associated with each category of PERA Investment Product and forming part of the Risk Disclosure Statement; and

4) The specific obligations and responsibilities of the Administrator, Investment Manager and Custodian of PERAs.

The Administrator shall adopt Pre-Acceptance Disclosure Policy covering the foregoing activities.

b. Conduct of Client Suitability Assessment in the Account Opening Process

The Administrator shall require Contributors to accomplish a client suitability questionnaire prior to the acceptance of such Contributor's PERA investment.

The Client Suitability Assessment stall provide the Administrator with information leading to the prudent administration of the PERA suited to the investment objectives and risk tolerance of the Contributor. The Client Suitability Assessment shall be formulated to solicit, at the minimum, the following information:

1) Personal Data — x x x.

2) Investment Objective — x x x.

3) Knowledge and Financial Sophistication — x x x.

4) Risk Tolerance — x x x.

The results of Client Suitability Assessment shall be used as basis for determining the categories and classifications of PERA Investment Products that may be offered to the Contributor.

c. Documentation

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PERA Rule 13 — Premature Termination.

A. x x x.

B. Premature termination shall not occur in the event that the Contributor, upon giving the instruction to terminate the PERA or to withdraw the PERA Investment Products, directs the Administrator to transfer the entire PERA Assets therefrom to other PERA Investment Products and/or to another Administrator.

PERA Rule 14 — Tax-Free Distributions upon Retirement/Death.

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PERA Rule 15 — Penalty on Early Withdrawal.

A. Any premature termination under PERA Rule 13 shall constitute an early withdrawal subject to penalties.

The Administrator shall forthwith:

1. Compute and withhold from the proceeds due to the Contributor the early withdrawal penalty in an amount equivalent to the tax incentives enjoyed by the Contributor during the entire period of the PERA.

2. Notify the BIR of the early withdrawal of the PERA and ensure remittance of early withdrawal penalties withheld from the Contributor.

B. No early withdrawal penalty x x x.

C. The distribution of the funds for which the Contributor x x x.

The above-mentioned amendments shall take effect immediately upon its publication in a newspaper of general circulation.

Approved on March 2, 2020.

By:

BANGKO SENTRAL NG PILIPINAS

By:

(SGD.) BENJAMIN E. DIOKNOGovernor

SECURITIES AND EXCHANGE COMMISSION

By:

(SGD.) EMILIO B. AQUINOChairperson

DEPARTMENT OF FINANCE

By:

(SGD.) CARLOS G. DOMINGUEZ IIISecretary

INSURANCE COMMISSION

By:

(SGD.) DENNIS B. FUNACommissioner

BUREAU OF INTERNAL REVENUE

By:

(SGD.) CAESAR R. DULAYCommissioner

Published in the Manila Bulletin on March 23, 2020.

 

n Note from the Publisher: Written as "2019 RULES AND REGULATIONS IMPLEMENTING THE PERSONAL EQUITY AND RETIREMENT (PERA) ACCOUNT OF 2008" in the original document.