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5 min read

A Guide to the PERA Fund in the Philippines

Global payroll

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Author

Joanne Lee

Last Update

June 16, 2025

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Table of Contents

What is the PERA Fund in the Philippines?

Why PERA fund contributions matter

Key considerations before offering PERA contributions

PERA fund Philippines: The bottom line

How Deel helps you manage global payroll and benefits

Key takeaways
  1. The PERA fund in the Philippines is a voluntary retirement savings plan that provides employees with tax-exempt contributions and investment earnings. It offers flexibility through diverse investment options, empowering individuals to tailor retirement strategies to their financial goals.
  2. For employers, the PERA fund is a cost-efficient way to enhance total compensation without increasing payroll tax burdens. PERA contributions are tax-deductible for businesses and attract top talent.
  3. With Deel Global Payroll, businesses can easily administer local benefits like PERA in full compliance with Philippine regulations, streamlining operations and supporting employee well-being across borders.

Navigating the fine line between employer obligations and employee benefits can feel like a rollercoaster for global businesses. What’s mandatory in one country may be entirely optional elsewhere—and in many cases, so-called “optional” benefits are heavily influenced by local cultural expectations.

In the Philippines, retirement saving through the Personal Equity and Retirement Account (PERA) fund is one such case. This tax-advantaged account, while optional, offers unique advantages for both employees and employers, especially those navigating global payroll complexities.

In this guide, we’ll break down what the PERA fund is, its benefits for employers and employees, and key considerations to take before offering PERA fund contributions.

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What is the PERA Fund in the Philippines?

The Personal Equity and Retirement Account (PERA) is a voluntary, tax-exempt retirement savings plan introduced by the Philippine government under Republic Act No. 9505 (also known as the Personal Equity and Retirement Account Act of 2008).

Modeled similarly to the US Individual Retirement Account (IRA), the PERA fund in the Philippines allows individuals to make annual contributions to grow their retirement savings through various investment options.

Participants can invest in their PERA fund through a range of asset classes tailored to different risk levels:

  • Unit Investment Trust Funds (UITFs): Pooled investment vehicles managed by banks, where funds from multiple investors are combined and invested in a diversified portfolio of assets. UITFs are ideal for individuals seeking professional fund management without the need for hands-on involvement

  • Mutual funds: Similar to UITFs but managed by investment companies, mutual funds pool money from investors to buy securities like stocks and bonds. These are regulated by the Securities and Exchange Commission (SEC) and provide diversification and liquidity

  • Exchange-listed stocks on the Philippine Stock Exchange (PSE): Equities or shares of publicly traded companies in the Philippines. Investing in these stocks allows PERA contributors to gain partial ownership in corporations and potentially earn through dividends and capital appreciation

  • Government securities: Low-risk investment options issued by the Philippine government, such as treasury bills and treasury bonds. These are considered one of the safest options for preserving capital while earning steady interest

  • Insurance pension products: Retirement-focused insurance plans that provide both protection and investment growth. These typically offer long-term payouts and are managed by licensed insurance providers

  • Annuity contracts: Financial products that provide fixed payments to an individual for life or a specified period, often used to ensure a stable income stream during retirement. These are typically issued by insurance companies and offer both retirement security and estate planning benefits

Eligible individuals are allowed to open a maximum of five PERAs with one administrator at a time, opening opportunities to explore a variety of investment products to grow retirement funds.

Self-employed and full-time employees in the Philippines can contribute up to ₱200,000 annually, and overseas Filipinos can contribute up to ₱400,000 annually.

Employer contributions are voluntary and capped at the same maximum annual qualified contribution as employees. These contributions are subject to favorable tax treatment—making it a compelling employee benefit option.

Why PERA fund contributions matter

Although PERA participation isn’t required by law, it comes with a range of benefits for both employees and employers that make it a valuable investment.

For employees:

  • Tax-advantaged contributions: Employees receive a 5% tax credit on PERA contributions, and all income earned from investments and reinvestments within the maximum annual limit are tax-exempt. Additionally, withdrawals made during retirement are tax-free under the following circumstances:

    • The individual withdrawing has reached the age of 55 and has contributed to the PERA account for at least five years (also known as the 55 and 5 rule)
    • Upon death, regardless of age or contributions
  • Long-term financial security: The Government Service Insurance System (GSIS) and the Social Security System (SSS) in the Philippines may not cover all retirement needs, so the PERA fund provides an opportunity to build additional retirement income

  • Investment flexibility: Employees can choose how their PERA funds are allocated among approved investment instruments based on risk appetite and financial goals, making it a flexible option to fit different lifestyles

  • Retirement and safety net: In addition to retirement benefits, PERA accounts can also act as a financial cushion in cases of disability or untimely death

For employers:

  • Attract and retain top talent: In the competitive hiring landscape across Southeast Asia, offering voluntary retirement benefits like the PERA fund distinguishes your company from others while assuring employees and new hires that you care about investing in their future

  • Cost-efficient compensation: Employer contributions to the PERA fund are tax-exempt, which allows employers to increase total compensation without increasing payroll burden when hiring in the Philippines

  • Tax deductions: PERA contributions by employers are tax-deductible, reducing the company’s taxable income. For global businesses managing budgets across countries, this is a win-win scenario that reduces tax burden while delivering real value to employees

  • Employee engagement: Financial well-being is directly linked to employee satisfaction and productivity. According to PwC’s 2023 Employee Financial Wellness Survey, 57% of employees identified finances as the top cause of stress in their lives, and 44% of employees admitted personal finances have been a distraction at work. By investing in long-term financial health through supplemental retirement funds like PERA, companies demonstrate commitment and care for their employees.

See also: How to Reduce Payroll Costs in the Philippines

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Key considerations before offering PERA contributions

While the PERA fund in the Philippines offers clear advantages, employers should still consider operational and financial factors, especially companies operating globally.

  • Payroll complexity: Adding PERA contributions introduces new employee benefits to manage in your payroll process, which need to be carefully tracked, calculated, and documented. Contributions must be routed through an accredited PERA administrator and reported accordingly for tax and compliance purposes

  • Investment risks: PERA contributions are invested in financial instruments—such as mutual funds, government securities, or equities—whose performance can vary over time. While these vehicles offer growth potential, they are subject to market volatility and don’t guarantee fixed returns

  • Withdrawal restrictions: Funds are generally locked in until age 55 and after at least five years of participation. Early withdrawals are generally subject to penalties, except in cases such as death of the account holder, long-term illness, or permanent disability.

Incorporating PERA into your employee benefits package is ultimately a strategic decision. But in a talent market where global mobility is rising and retirement security is a growing concern, offering such long-term benefits can set your company apart and retain top talent.

PERA fund Philippines: The bottom line

Contributing to the PERA fund in the Philippines isn’t mandatory—but it can be a powerful option for enhancing compensation, improving tax efficiency, and demonstrating long-term care for your people.

When managing multiple global teams, adding benefits like PERA can feel daunting. But what may seem like a small gesture can become a life-changing resource for your employees, especially in regions where retirement savings fall short.

For companies competing to hire top talent in the global workforce, offering local, tax-efficient benefits could make all the difference.

How Deel helps you manage global payroll and benefits

Deel Global Payroll enables businesses to stay compliant and competitive across 100+ countries. We manage local tax rules, benefits administration, global compliance, and team management in a unified, easy-to-use platform—so you can focus on strategic initiatives and growing your team.

Whether you’re hiring and paying employees in the Philippines or another country, our platform and solutions are flexible to fit your current needs and grow to meet your future ones.

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About the author

Joanne Lee is a content marketing professional with 6+ years of experience creating effective social, search, email, and blog content for companies ranging from start-ups to large corporations. She's passionate about finding creative ways to tell a purpose-driven story, staying active at the gym, and diversity and inclusion. At Deel, she specializes in writing about topics related to global payroll.

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