One positive and fairly recent development in retirement investing in the Philippines is the entry of another industry player whose goal is to bring the Personal Equity and Retirement Account or PERA to the masses. As I shared in my post, New Updates on PERA, ATRAM joined BDO and BPI to become one of the three (3) PERA administrators accredited by the Bureau of Internal Revenue (BIR) with its PERA by Seedbox platform.
With this new PERA entrant, I believe it’s high time that we take a closer look into the importance of choosing your PERA Administrator. In the past, I introduced PERA and why we should all open an account as soon as possible. I also analyzed the available PERA investment instruments where we can put our retirement money. Here, I will focus on the PERA Administrator and the factors you should consider when you open your PERA account.
WHAT IS A PERA ADMINISTRATOR?
So what is a PERA administrator?
The Administrator is an entity accredited by the Bureau of Internal Revenue (BIR) who is responsible for overseeing PERA. It’s other responsibilities include:
- Opening the PERA in the name of the contributor;
- Reporting on contributions made on the account;
- Computing the value of the investments;
- Implement the Contributor’s instructions on where to invest the PERA funds
- Ensure that PERA contributions are invested and reinvested in accordance to the prudential guidelines set by regulatory agencies
- Enforcing PERA contribution and withdrawal limits
- Report to the BIR and the Contributor the contributions and withdrawals to/from PERA
- Collecting appropriate taxes and penalties for the Government;
- Apply for the BIR Income Tax Credit Certificate/Certificate of Entitlement on the behalf of the Contributor
- Consolidating reports on all investments, income, expenses, and withdrawals on the account, and ensuring that PERA contributions are invested in accordance with he prudential guidelines set by the Regulatory Authorities.
The Administrator is not the same as your Investment Manager. The Investment Manager is the one in charge of making investment decisions for your PERA. This is the person who manages the actual fund. Meanwhile, the Administrator is sort of like the logistics person who does the paperwork and ensures that the reporting and logistical requirements for your PERA are done correctly.
ONE CRUCIAL FACTOR TO CONSIDER
One extremely important thing to consider when opening a PERA is that you are only allowed to have 1 administrator and that at the moment, changing your administrator is a complicated process.
If you already have an existing PERA account with BDO (which means BDO is your PERA administrator), if you apply for an account with either BPI or Seedbox, your application will be denied. The administrators will know if you already have an existing account fairly easily by checking the Digital PERA platform.
Because of the above considerations, I encourage you to do your research thoroughly first before you do decide to open a PERA. Take your time, but no too much time. Again, when investing for your retirement, time in the market is of utmost importance. If you keep on delaying just waiting for the “best option out there” it may take you a long time. Or most likely, it won’t even happen. You’ll be wasting years waiting for the perfect PERA administrator or investment that you miss out on the actual gain that you should’ve had if you decided to be in the market in the first place.
Don’t be like my college friend who took her sweet time deciding if she will go home for the weekend and took too much time that by the time she’s ready to decide, the last bus already left.
COMPARING PERA ADMINISTRATORS
I prepared this simple table comparing the 3 PERA administrators. I included factors that are considered as the most important by reader questions and comments in previous posts and conversations with friends, both online and offline.
PERA by Seedbox PH
Online, with an existing BDO Online Banking account.
Online. Can create a new account in the PERA by Seedbox website.
TO BE LAUNCHED
1% based on the contribution made upfront
1/3 of 1% based on the contribution made upfront
None (so far)
PERA-qualified investment instruments available
BPI and BDO products plus the following offerings from Metrobank:
l Metrobank PERA Bond Fund
l Metrobank PERA Equity Fund
l Metrobank PERA Money Market Fund
* No information publicly available yet for the MB offerings.
Yes, through BDO online banking log-in (web and app)
Yes, through https://pera.seedbox.ph
Active bank account with the PERA admin?
No. Can do transfers from and to any bank
1. Ease of Account Opening
I think I’m very qualified to talk about this portion because I tried opening a PERA with all 3 administrators.
I opened an account with BPI in 2017. Then and now, account opening with BPI requires you to visit BPI branch. In my case, I emailed firstname.lastname@example.org to set an appointment with a PERA representative in a BPI branch.
For BDO, you can open an account with their online banking platform provided that you have an existing online banking account. Which means that you should already have an existing BDO account (because only those who have BDO bank accounts can have online banking accounts).
If you are an existing BDO client, opening PERA is very easy, you only have to follow the prompts in the PERA tab and go through the entire process, which includes watching a video about PERA and answering a questionnaire on your risk profile. However, since I already have a BPI PERA, my application was canceled.
After the launch of PERA by Seedbox last year, I immediately tried applying for an account through their website. Yes, I know that my application will be ultimately denied but for you, dear readers, I’m willing to experiment and do science.
Of the three, my opinion is that Seedbox is the easiest and most convenient, especially for people who don’t have an account with either BPI or BDO, as well as those who are based outside of the country. You can register for an account with PERA by Seedbox PH and after verifying your registration, you can already go through the application process on the website. The risk assessment and FATCA compliance are also part of the entire work process. You have to provide your valid government-issued IDs and a representative will call you via Skype or Viber to verify your identity (the call took less than 2 minutes).
Verdict: In this category, the clear winner is: PERA by Seedbox PH
2. Administrative Fee Charged
At the moment, Seedbox is charging zero per transaction. Of course, Seedbox’s zero fee is so much better than BDO’s 1/3 of 1% and BPI’s full 1%. So for now, Seedbox is obviously ahead.
However, I also want to point out that for other investments handled by Seedbox, they charge some of the highest fees in the market. As a new entrant to PERA, I believe this is Seedbox’s way to encourage investors to use their platform, which, I admit, is a tactical marketing maneuver. The smart part amount this move is that whatever administrative fees Seedbox decides to charge in the future, investors will be stuck, whether they are agreeable to the new rates or not.
So my judgment is: Seedbox is the winner for zero fees (at the moment) but keep your eyes peeled for the new administrative fees they will charge after their introductory offer is over.
3. Investment Instruments on Offer
I think this is where Seedbox has a huge edge over its competitors. BDO and BPI can only offer instruments that they offer. When your administrator is BDO, you can only invest in BDO instruments. If your administrator is BPI, you can only invest in BPI instruments. But because Seedbox offers BDO, BPI, and Metrobank products, you have the flexibility of mixing and matching your investment instruments from these 3 institutions.
Remember that you can have up to five (5) PERA accounts at the same time? If your administrator is Seedbox, you can combine BPI, BDO, and Metrobank instruments, which is great for diversification as well as choosing the product with the lowest fees.
For example, you can invest a portion of your retirement funds in BDO PERA Equity Index Fund for growth, a portion in BPI PERA Government Bond Fund for stability and (this is more applicable for those who have reached retirement age), a portion in Metrobank’s PERA Money Market Fund for liquidity.
Verdict: Seedbox is the winner in this category.
4. Online Platform
BPI sends quarterly PERA investment reports in pdf format to their investors via email. Unfortunately, the same information is not available in either BPI Trade and the BPI online banking platform. You have to wait for the report to get a summary of your investments.
If you want to know the value of your investments at any given time, you have to manually calculate it using the number of shares you own with the current unit price of the fund, which is posted on the BPI Asset Management Fund website. Look at the sidebar and scroll to the bottom of the page to see the PERA funds valuations.
Both BDO and Seedbox have online platforms.
your PERA investment information is posted online, which is very convenient. Topping up your investments can also be done through your online account.
Verdict: BDO and Seedbox are tied for this category.
5. Required bank account
For both BPI and BDO, you need to have existing savings or checking accounts so that you can open PERA. If you don’t have one, they should be able to help you open one.
For seedbox, since it is not a bank with an investment arm but an investment company, it doesn’t require that you have an existing account with them. You can just open PERA even if you’re not yet an existing client.
One concern about opening an account with either BPI or BDO is that if you’re based overseas AND you don’t have a savings or checking account with either of them, you have to go back home before you can start investing in PERA.
On the other hand, with Seedbox, you can open an account even while overseas. Just make sure that you have existing savings or checking account with any Philippine bank since you need one to appoint as your Settlement Bank. You should also be able to fund Seedbox from any Philippine bank account.
Verdict: Seedbox wins this round!
So you might have noticed above that PERA by Seedbox PH won almost all of the categories I mentioned above. By the way, this is not a sponsored post paid for by ATRAM/Seedbox but if they want to work with me, I’m here (call me! :D)
Joking aside, even if Seedbox won in all the categories, I think investors should still weigh carefully before selecting any of these PERA administrators. My biggest concern from making the arduous process of changing my PERA administrator is the fact that WE STILL DON’T KNOW HOW MUCH SEEDBOX WILL CHARGE ONCE THEIR INTRODUCTORY OFFER IS OVER. Sure it’s zero fees now, but how much will it be after is the big question. Of course, it can at the very least be as low as BDO’s 1/3 OF 1% or be even higher than BPI’s 1% administrative fee per transaction.
In the meantime, I will stick with my current administrator and wait until Seedbox makes its announcement.
I’m able to wait because I already have accounts with BPI and BDO and have access to their online platforms. Should I decide to change my PERA administrator to BDO, my online access is ready and there’s no need for me to open any savings or checking account because I already have one. The same thing with Seedbox. If I decide to shift to Seedbox because its offer is better than both BPI and BDO, I will start with the process.
But (and it’s a huge but) if you’re an overseas Filipino who doesn’t have accounts with BPI and BDO and the only thing that’s stopping you from investing for your retirement is this fact, I will encourage you to open an account with PERA by Seedbox instead.
I hope that this post is helpful to many of you who are still confused, conflicted, bewildered, and baffled if they should open PERA and what criteria they should set when opening an account. Don’t let the noise and minutiae discourage you from investing for retirement as soon as possible.
Have you finally taken the plunge to invest for retirement? How did you do it? Did you consider investing in PERA? How did you choose which PERA administrator to go with? I’m looking forward to your thoughts and experience in the comments