The Securities and Exchange Commission (SEC) has released the list of equities, bonds, funds and other securities where Personal Equity and Retirement Account (PERA) funds may be invested.
The Commission on August 11 issued SEC Memorandum Circular No. 7, Series of 2022, providing for the Rules on Qualified and/or Eligible Personal Equity and Retirement Account (PERA) Investment Products, pursuant to Republic Act No. 9505, or the PERA Act of 2008, and its implementing rules and regulations.
The new guidelines identify securities registered pursuant to the requirements of Republic Act No. 8799, or the Securities Regulation Code, and Republic Act No. 2629, or the Investment Company Act, that are deemed to be eligible PERA investment products.
These include newly formed mutual funds, including any sub-fund of an umbrella fund and exchange-traded funds whose fund managers have a track record for the past five years prior to the application of being responsible for the operation and management of a registered mutual fund which has been offered to the general public. The name of the newly formed mutual fund must contain the words “Personal Equity and Retirement Account” or “PERA.”
Real estate investment trust (REIT) shares, corporate bonds with an investible rating issued by an accredited credit rating agency, and equity securities that form part of the Philippine Stock Exchange (PSE) Dividend Yield Index are also deemed eligible PERA investment products.
The guidelines further identify government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with BSP requirements as eligible PERA investment products.
Equity securities included in the PSE index (PSEi) may be classified as eligible PERA investment products, provided that the PSE certify to the SEC that the equity securities met the requisites of being non-speculative, readily marketable, and with a track record of regular income payment to investors. The Commission will disseminate the PSE- certified list of PERA eligible securities comprising the PSEi through its website.
The SEC may qualify other securities to be eligible as PERA investment products if the product is non-speculative, readily marketable, and has a track record of regular income payment to investors.
A security loses its eligibility as a PERA investment product when the SEC declares it to be ineligible. A registered equity security may also lose its eligibility if its registration statement gets suspended or revoked, or in the case of a PSEi member security, if it is removed from the PSEi.
Meanwhile, corporate bonds may be deemed ineligible if they are declared to be in default by a competent authority or person in accordance with applicable laws, rules, and contracts, and if their credit rating is downgraded to a non-investible grade. The same provisions apply for corporate bonds issued by banks.
A security that has been deemed eligible by the SEC may likewise lose its eligibility after it has been found to have lost one or all of the required characteristics of being non-speculative, readily marketable, and provider of regular income payment.
An investment in a security that is later declared to be ineligible as PERA investment product may continue to be authorized to be part of the PERA portfolio, provided that any subsequent investments by a contributor in said security shall not qualify to be included in the PERA portfolio.
The rules require issuers of securities qualified to be eligible PERA investment products to comply with the reportorial requirements set by the SEC.
Failure to abide by the memorandum circular and other laws, rules, and relevant regulations will result in administrative penalties, and other civil and criminal liability provided for under applicable laws.
