Guidelines for Approval of PERA Investment Products

No PERA Investment Product shall be issued or delivered within the Philippines by a life insurance company unless it has been previously approved by the Insurance Commission under Rule 3 (h) of the Rules and Regulations Implementing the PERA Act of 2008.
Approval is required in addition to compliance with the Insurance Code provisions on Variable Contracts and the listed circulars and guidelines on variable products and contracts.

Contracts for PERA Investment Products must comply in substance with PERA Act of 2008 conditions under enumerated sections and the corresponding PERA rules.
PERA investment contracts must also comply with the applicable requirements under Title 10, Sections 227 to 240 of the Insurance Code on Variable Contracts, including Circular Letter Nos. 27-2005 and 32-2011, and the Guidelines on Variable Life Insurance Contracts.
PERA investment product contracts must contain the conditions corresponding to Section 4 (Establishment of a PERA), Section 5 (Maximum Annual PERA Contributions), Section 11 (Termination), Section 12 (Distributions Upon Retirement/Death), and Section 13 (Penalty on Early Withdrawal) of the PERA Act of 2008.
PERA Investment Product contracts must bear the attached PERA Product Logo.

A Contributor may create and maintain a maximum of five (5) PERA at any one time under Section 4.
A Contributor must designate and maintain only one (1) Administrator for all PERA under Section 4.
The Contributor makes all investment decisions pertaining to the PERA under Section 4.
A Contributor may appoint an Investment Manager (either in writing or in electronic form) to make investment decisions on the Contributor’s behalf without prior consultation under Section 4.

Under Section 5, a Contributor may make an aggregate maximum contribution of One Hundred Thousand Pesos (Php100,000.00) (or its equivalent in any convertible foreign currency at the prevailing rate at the time of the actual contribution) to his or her PERA per year.
If the Contributor is married, each spouse may contribute up to Php100,000.00 (or its equivalent) per year to his or her respective PERA under Section 5.
If the Contributor is an overseas Filipino, the Contributor is allowed to make maximum contributions double the allowable maximum amount under Section 5.
A Contributor may contribute more than the maximum amount prescribed under Section 5; however, the excess shall no longer be entitled to a tax credit of five percent (5%).
The Secretary of Finance may adjust the maximum contribution from time to time by considering the present value of the maximum contribution using the Consumer Price index published by the National Statistics Office, the government’s fiscal position, and other pertinent factors.

Under Section 11, any premature termination is treated as an early withdrawal under Section 13.
The penalties under Section 13 do not apply if the entire proceeds are immediately transferred to another PERA investment and/or another Administrator under Section 11.

Under Section 12, distributions may be made upon reaching fifty five (55) years of age if the Contributor has made contributions to the PERA for at least five (5) years.
Distributions under Section 12 may be made either as a lump sum or as a pension for a definite period or lifetime pension, based on the option of the Contributor.
Under Section 12, the Contributor may continue the PERA even after the option to distribute is available.
Under Section 12, complete distribution must be made upon the Contributor’s death irrespective of the age of the Contributor at the time of death.

Under Section 13, any early withdrawal is subject to a penalty whose amount is determined by the Secretary of Finance and which is payable to the government.
Under Section 13, the penalty cannot be less than the tax incentives enjoyed by the Contributor.
Under Section 13, no early withdrawal penalty is imposed for withdrawals used for:
- Payment of accident or illness-related hospitalization in excess of thirty (30) days; and
- Payment to a Contributor who has been subsequently rendered permanently totally disabled as defined under the Employees Compensation Law, Social Security Law, and Government Service insurance System Law.

The following may qualify as PERA investment Products, among others:
- annuity contracts
- insurance pension products
- traditional life insurance products with living benefits
For traditional life insurance products with living benefits, anticipated/expected accumulation of living benefits must exceed total premiums paid as of the eligibility date for tax exemption of the contributor, where the eligibility date is at fifty-five (55) years of age or after five (5) years contribution to the PERA, whichever is later.
“Living Benefits” include guaranteed maturity benefits, anticipated benefits, dividends, and contractual fund accumulations.
Excluded from living benefits are benefits payable upon the insured’s death, disablement/dismemberment, hospitalization, diagnosis of critical illness, and other benefits due to injury or sickness.
Variable life insurance products qualify as PERA investment products if the segregated portfolio or designated separate account is invested in units of unit investment trust funds, share of stock of mutual funds, government securities, share of stock or other security listed and traded in a local exchange, or exchange-traded bond.
Other PERA investment products may qualify if they are non-speculative, readily marketable, and have a track record of regular income payments to investors.
Any other product may qualify if it is approved by the Insurance Commission for PERA purposes.

A Contributor must have the capacity to contract under the applicable PERA framework.
A Contributor must possess a Tax Identification Number (TIN).

The Circular Letter directs life insurance companies to secure Insurance Commission approval before issuing or delivering PERA investment products in the Philippines.
The Circular Letter requires PERA product contracts to incorporate the enumerated PERA conditions and to bear the PERA Product Logo.
The Circular Letter places the determination of early withdrawal penalties and maximum contribution adjustments with the Secretary of Finance under Sections 5 and 13.