February 5th, 2025
I thank the leadership of both houses, Speaker Romualdez and Senate President Escudero, for ratifying the Capital Markets Efficiency Promotion Act. Beyond reducing friction costs in investing in capital markets, we took a big step in securing the future of young people.
Senator Gatchalian and I hammered out a provision that grants employees who contribute to the Personal Equity and Retirement Accounts (PERA) of their employees an additional deduction of 50% from their taxable income. I expect this to expand the currently dismal levels of personal savings for retirement.
There are currently less than 6000 PERA Accounts and just around P380 million in PERA contributions despite PERA Law being around for 17 years.
We pushed for this amendment because at some point, around 2051, the working age population of the country will peak. That is around the same time as the end of the SSS’s current fund life. In other words, if we don’t do something, millennials and younger workers are in deep trouble when they retire. SSS pensions are woefully inadequate for dignified old age. Wages are not enough for workers to set aside for their future. We really need a bit more from employers – and this is a provision that incentivizes them, rather than forcing them, to help their workers save.
The capital markets also need savings for investing in stocks and bonds. This is what an expanded PERA will do. Without this reserve of savings, we will not see capital markets improve, no matter how easy we make it to invest. No demand, no appreciation.
I also thank all the members of the bicameral panel, and the representatives of the minority on both sides, especially Senator Koko Pimentel, for agreeing to the amendment.
If PBBM signs this into law with the amendment Senator Gatchalian and I introduced, he will be giving young people a gift they may not yet fully appreciate now, but which they will see as a lasting legacy of his when they retire.
This is a tree whose fruits I will not see, but I am thankful for the honor of being able to plant it.