[Finterest] What to consider when opening your PERA account

MANILA, Philippines – In the first PERA story, we talked about how PERA is supposed to be a retirement account structure with tax benefits, built to reward long-term saving.

Now comes the equally important decisions you have to make when starting, such as where to open the account and what to invest in.

PERA is a regulated ecosystem. It has roles, and those roles matter because they affect your experience as an investor.

At the center is you, the contributor. You put money in, you choose investments, and the results determine how your retirement will look like years from now. now. To make this work, you generally need to deal with three parties.

One is the PERA administrator, the entity that manages your PERA account, processes contributions and transactions, and generally runs the account structure. Their job is to show you what PERA products are available, check that what you choose matches your risk profile, and send regular updates on your account.

An administrator can be a bank, trust corporation, insurance company, or a securities broker, pre-qualified by its regulator (Bangko Sentral ng Pilipinas, Securities and Exchange Commission, or the Insurance Commission) and accredited for PERA purposes. In practice, this is why PERA is offered not only by banks like BDO and BPI’s trust arm, but also by broker-led platforms like DragonFi.

Another is the PERA custodian, which holds the PERA assets for safekeeping. The custodian must be a separate entity unrelated to the administrator and responsible for receiving all funds in connection with PERA and maintaining custody of the securities or other evidence of investment. That separation is intentional. It creates checks and balances so the party administering your PERA is not the same party solely holding the assets and records. Unless you’re going for the self-custody option, the PERA custodian that administrators usually work with is Landbank.

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The third is the PERA product provider, which is the institution that offers the eligible investment product you will actually buy inside your PERA. If you’re investing in a PERA-specific Unit Investment Trust Fund (UITF), for example, that product might be offered by a bank like BDO or BPI. In some setups, your administrator and product provider can be part of the same bank group, so you open your PERA and invest in that same institution’s PERA funds. In other setups, they’re separate. If you open a PERA through a platform like DragonFi, DragonFi can serve as the administrator while the UITF you buy inside PERA is still provided and managed by a bank’s trust arm like in the case of BDO or BPI.

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Which PERA administrator should you choose?

Essentially, the two main choices you have to make is where you will open your PERA (your administrator) and what you will invest in (your PERA product).

Start with the simplest and arguably most important question: will this setup make it easy for you to stay consistent? PERA only works if you keep funding it, so you want an administrator that fits the way you actually live and manage money.

If you’re already a heavy user of a particular bank’s app, a bank-administered PERA with BDO, BPI, or Metrobank may reduce friction. For instance, if you already have a BDO Online Banking Account, you can open and invest directly through BDO’s trust website.

Similarly, if you’re an active stock trader, an administrator like DragonFi can feel more intuitive, considering you can easily move cash from your existing DragonFi account into your PERA account.

Another thing to be mindful of is fees, because administrators don’t all charge the same rate. The fees typically come in layers: there may be a set-up or account-related fee, cash-custody fees that can include per-transaction charges for each contribution depending on the custody arrangement with Landbank, and an annual administration fee that is often computed as a percentage of your PERA account value.

On top of that, you still pay the fees of the investment you choose. If you’re buying a PERA UITF, the fund itself charges a trust or management fee. If you’re buying stocks or Real Estate Investment Trust (REITs) through a broker-led PERA setup, you’ll typically pay standard brokerage-related trading costs instead.

What PERA products do I invest in?

Now that you’ve chosen an administrator, the next step is deciding what you’ll actually invest in. This choice will shape your returns over time, but it should be guided by your risk tolerance. PERA is not guaranteed, and neither are the investments you can hold inside it. Even safer funds can have periods of weaker returns, and stock-based options can swing sharply.

Here’s a quick rundown of the common PERA product types you’ll see in the market:

• Money market fund – Invests in very short-term peso instruments and is generally designed for stability and liquidity. Risk is typically low, but returns also tend to be modest.
• Government bond fund – Invests mainly in Philippine government securities. Risk is generally low, but it can still move when interest rates change. When rates rise, existing bonds often fall in price, and bond funds can temporarily dip because of that interest-rate risk.
• Corporate bond fund – Invests in corporate debt, which can offer higher yield potential than government bonds. The tradeoff is higher credit risk, meaning the fund is more exposed to the possibility that some issuers weaken or fail to pay.
• Equity fund – Invests primarily in stocks, which is where long-term growth potential usually comes from. It also comes with bigger price swings, so risk is generally high.
• Equity index fund – Tracks an index like the Philippine Stock Exchange Index (PSEi) instead of trying to beat it through stock-picking. Risk is still high because it’s still equity exposure, but it tends to be more diversified and less dependent on a manager’s picks than an actively managed equity fund.
• Stocks in the PSE Index – These are individual blue-chip stocks that are part of the PSEi. These are among the PERA-eligible investments you can buy on DragonFi. Risk is high because it is concentrated on a single position rather than diversified across multiple ones in a fund.
• Dividend Yield Index stocks – These are individual stocks included in the PSE Dividend Yield Index, which tend to be shares of companies that consistently give high-yielding dividends. Risk is still high because though dividends can help cushion returns, they’re not guaranteed every year, and the share prices can still swing.
• REITs – These are shares of listed REIT companies, which are built to own income-generating real estate and pay out dividends. Risk is still generally high because REITs are equities, and they’re sensitive to property conditions and interest-rate moves, even if dividends are a big part of the appeal.

Before getting into PERA and investing, always make sure you’ve done your own research, understand the product and its risks well, and know exactly what fees come with it. – Rappler.com

Lance Spencer Yu is a former business journalist for Rappler. He later worked as a private capital analyst at MSCI, working directly with sovereign wealth funds, pension funds, and family offices across the Asia-Pacific region. He now serves as an investment and strategy analyst at Dedale, producing in-depth, actionable research for private equity funds and institutional investors.

Finterest is Rappler’s series that demystifies the world of money and gives practical advice on managing your personal finances.

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