SEC lists possible PERA investment products

The Securities and Exchange Commission (SEC) will soon issue the list of equities, bonds, funds and other securities in which Personal Equity and Retirement Account (PERA) funds may be invested.

The Commission on May 17, 2022 released for public comment the proposed Rules on Qualified and/or Eligible Personal Equity and Retirement Account Investment Products, pursuant to Republic Act No. 9505, or the PERA Act of 2008, and its Implementing Rules and Regulations.

Under the proposed rules, securities that are 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, 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 of at least five years, and whose names contain the words “Personal Equity and Retirement Account” or “PERA”; real estate investment trust 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 index (PSEi).

Government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with BSP requirements will also be considered eligible PERA investment products.

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 issued by banks 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 noninvestible grade.

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 such 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 after being declared as ineligible, shall not qualify to be made part of the PERA portfolio.

The rules will require issuers of securities that have been qualified by the SEC to be eligible PERA investment products to comply with reportorial requirements set by the Commission.

Failure to abide by the guidelines and other laws, rules, and relevant regulations will result in administrative penalties, and other civil and criminal liability provided for under applicable laws.

The public may access the draft memorandum circular providing the Rules on Qualified and/or Eligible Personal Equity and Retirement Account Investment Products on the SEC website. All interested parties have until June 1, 2022 to submit their comments through email at [email protected] or [email protected] addressed to Atty. Desiree Amor J. Franco.