THE BOURSE is pushing for the inclusion of securities comprising the Philippine Stock Exchange index (PSEi) in the initial list of investment products for personal equity retirements accounts (PERA).

A trader monitors stock prices at the Philippine Stock Exchange in Makati City in this May 12, 2009 file photo. — AFP

The 30 members of the local stock barometer will make a good batch of investible products for the voluntary retirement fund, PSE Chief Operating Officer Roel A. Refran told reporters after a product briefing in Makati City on Friday.

“Informally, that was our recommendation on the sidelines of the BSP (Bangko Sentral ng Pilipinas) launch — let’s look at the top 30 based on our PSEi criteria, that basket, to be the initial universe of permissible, investible product under the PERA regime,” Mr. Refran said.

The BSP rolled out PERA last Dec. 16, 2016, eight years after Republic Act No. 9505 came into force in 2008. The program complements the savings of workers through the Government Service Insurance System or Social Security System as well as the development of the capital markets.

A local employee may place as much as P100,000 a year in five PERA accounts at once. The cap rises to P200,000 for overseas Filipino workers. The account holder can enjoy a 5% tax credit that can be deducted in his or her annual tax liabilities.

The contributions will then be invested in products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities. The proceeds may be claimed upon reaching the age of 55 or after five years of investing in the fund.

Income generated from PERA contributions — up to the P100,000 cap for local employees and P200,000 for OFWs — are exempted from taxation. These may be reinvested unless withdrawn ahead of retirement.

So far, BDO Unibank, Inc. and Bank of the Philippine Islands (BPI) have obtained accreditation to administer PERA. The Land Bank of the Philippines, meanwhile, has received the mandate as cash custodian of the retirement fund.

The Securities and Exchange Commission, however, will have to identify stocks eligible to receive investments from PERA holders.

“The requirement under the law is these have to be non-speculative, readily marketable and steady stream of income although it specifies there that among [the investible products] are shares of stock,” Mr. Refran said.

In this light, the PSE is closely working with the corporate regulator on screening securities eligible for investment by PERA holders. 

“I sense that the most logical, permissible investible products for PERA would probably be the most liquid, [those with the] highest market capitalization and highest public float — the PSEi companies — although nothing yet cast in stone,” Mr. Refran noted.

At present, the PSEi includes SM Investments Corp., Ayala Land, Inc., SM Prime Holdings, Inc., Ayala Corp., JG Summit Holdings, Inc., BPI, Aboitiz Equity Ventures, Inc., BDO and PLDT, Inc.

Alliance Global Group, Inc., Aboitiz Power Corp., DMCI Holdings, Inc., Energy Development Corp., Emperador, Inc., First Gen Corp., Globe Telecom, Inc., GT Capital Holdings, Inc., International Container Terminal Services, Inc., Jollibee Foods Corp. also form part of the basket.

LT Group, Inc., Metropolitan Bank & Trust Co., Megaworld Corp., Manila Electric Co., Metro Pacific Investments Corp., Petron Corp., Robinsons Land Corp., Security Bank Corp., Semirara Mining and Power Corp., San Miguel Corp. and Universal Robina Corp. complete the list.

The PSE regularly updates the composition of the main index based on public ownership, market capitalization and trading activity.

To join the basket, a listed company must meet the float requirement of 12% as well as rank among the upper 25% in terms of daily value per month and among the 30 biggest in terms of market capitalization.

A company is included in the PSEi upon rising above the 25th position by full market capitalization, while a member is dropped upon falling below the 35th spot. The vacancy is filled by the highest ranking company in the reserve list in terms of volume-weighted average price in the 10 trading days prior to the deletion. 

“The PERA administrators are ready, BDO and BPI. Landbank has already been appointed as custodian. So, the players are there and the products need to be diversified and, I guess, all the more opened up,” Mr. Refran noted.