Filipinos planning for retirement can now earn tax-free returns without exposing their funds to stock market volatility. Under central bank guidelines issued on 20 August 2026, traditional bank time deposits are officially eligible under the Personal Equity and Retirement Account (PERA), offering a low-risk, guaranteed path to tax-advantaged savings.
The PERA Tax Advantage
Placing funds into a PERA time deposit yields dual financial perks that traditional deposit accounts cannot match:
- 5% Annual Tax Credit: Direct deduction from personal income tax liabilities based on yearly contributions—capped at ₱200,000 for locally employed or self-employed individuals, and ₱400,000 for Overseas Filipino Workers (OFWs).
- 100% Tax-Exempt Growth: All interest earned within the PERA account grows entirely free of local withholding taxes.
- Tax-Free Retirement Payout: Withdrawals are exempt from income tax once the contributor reaches age 55 and has made at least five annual contributions (the 55/5 rule).
Key Rules and Bank Requirements
The Bangko Sentral ng Pilipinas (BSP) guidelines under Section 1121 of the Manual of Regulations for Banks establish specific safeguards for PERA time deposits:
- Product Features: Accounts must carry a minimum maturity of 30 days and clearly include “PERA” in their official product names.
- Rolling Over Funds: Reaching maturity or pre-terminating a time deposit does not count as an early PERA withdrawal, provided the principal and interest remain within the contributor’s PERA account for reinvestment.
- Bank Qualifications: Participating banks must meet BSP prudential standards, obtain Bureau of Internal Revenue (BIR) accreditation, and execute distribution agreements with accredited PERA Administrators.
- Deposit Insurance: Placements remain standard bank deposits covered by Philippine Deposit Insurance Corporation (PDIC) insurance rules.
Growing Adoption
The addition of conservative time deposits targets risk-averse savers amid expanding interest in voluntary retirement products. Central bank data shows total PERA contributions jumped 45.3% year-on-year to ₱757.55 million, with active contributors exceeding 30,000.
BSP Deputy Governor Lyn I. Javier noted that time deposits remove friction for everyday savers by offering a “practical option… through a product they already understand and trust.”
This article is published on BitPinas: BSP Approves PERA Time Deposits: Rules, Tax Perks, and Eligibility Explained
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