By Revin Mikhael D. Ochave, Reporter
STOCK BROKERAGE DragonFi Securities, Inc. is working to improve retirement plans for Filipinos by encouraging the adoption of Personal Equity and Retirement Accounts (PERA).
“What we wanted to solve was the pension gap because only 20% of senior citizens are covered by the Social Security System (SSS) and Government Service Insurance System (GSIS), and the average monthly payout is P5,000,” DragonFi Co-Founder and Chief Executive Officer Jon Carlo C. Lim said in an interview with BusinessWorld.
“PERA solves multiple problems. It is the closest thing we have to a silver bullet. True economic democratization is retirement accounts because they create generational wealth,” he added.
DragonFi, launched in May 2023, is the stock brokerage arm of DoubleDragon Corp. (DD), an investment holding and real estate company.
PERA is a voluntary retirement savings program that supplements existing retirement benefits from the SSS, GSIS, and employer-sponsored plans. Created under Republic Act No. 9505 or the PERA Act, the program offers tax advantages that are not available through other retirement investment products, encouraging more Filipinos to save.
DragonFi became the first PERA administrator accredited by the Securities and Exchange Commission (SEC) in January. The company is preparing to launch its PERA offerings next month.
DragonFi’s accreditation followed the release of guidelines for the accreditation of PERA market participants in September of the previous year. As a PERA administrator, DragonFi will assist investors in opening, managing, and tracking their PERA accounts.
Mr. Lim noted that the benefits of PERA include a higher contribution limit and a 5% tax credit on contributions. He further explained that PERA enables tax-free growth, as all investment earnings and reinvestments are exempt from income taxes. Additionally, PERA funds are not subject to estate tax, as they do not form part of the estate in the event of the account holder’s death.
“We need to create an investing culture in the Philippines because Filipinos are not prepared for retirement. You have to incentivize that through tax benefits, and PERA achieves that,” Mr. Lim said.
“There’s no other investment vehicle more powerful than PERA because of its tax-advantage nature. But to drive mass adoption, you need to employ technology,” he added.
Mr. Lim, a graduate of the University of Chicago Booth School of Business, has over 20 years of experience in financial markets and has delivered above-benchmark returns through his investment strategies.
According to DragonFi’s website, a PERA investor could potentially earn P356,000 per year from dividends, assuming the investor contributes P50,000 annually to a PERA account for the next 30 years, earning an average dividend yield of 5% per year, with an annual capital appreciation of 3%.
With PERA, DragonFi said Filipinos could invest in a variety of financial products, including stocks, real estate investment trusts, and unit investment trust funds.
“It creates an investing culture, which drives liquidity and volume in the Philippine Stock Exchange, thereby strengthening our capital market. All associated elements of the capital market rise in tandem. That’s how you foster economic democratization,” Mr. Lim said.
Mr. Lim pointed to a growing demand for investment among Filipinos, citing other financial products such as the Home Development Mutual Fund’s (Pag-IBIG) Modified Pag-IBIG II (Pag-IBIG MP2) savings program.
“There’s clear evidence. Look at how many people invest in Pag-IBIG MP2. It’s sort of becoming the default investment. But PERA is even more powerful because the investor is already ahead by 15%, 20%, or 25% the moment they put it in PERA, as long as it’s part of the compensation package,” he said.
In February, DragonFi Co-Founder and DD Chairman Edgar “Injap” Sia II pledged a P10-million matching grant fund to encourage more Filipinos to invest in PERA.
The grant will support 2,000 Filipinos aged 18 to 35. Each participant who contributes the first P5,000 to their PERA account will receive an additional P5,000 in matching funds, effectively doubling their investment.
“We are building that ecosystem that will allow Filipinos to invest seamlessly, easily, and efficiently. I really want to be the go-to investment app for Filipinos,” Mr. Lim said.
“We want to create an investment culture, and the way to drive mass adoption is by using cutting-edge technology,” he added.
As of end-2024, accumulated contributions to PERA rose by 24% to P491.4 million, up from P396.3 million at the end of 2023, according to Bangko Sentral ng Pilipinas data.
PERA contributors also increased by 6.4%, reaching 5,912 as of end-2024, compared to 5,555 the previous year.
The majority, or 4,211, of the accumulated PERA contributions came from employee contributions, followed by contributions from overseas Filipino workers at 789, and self-employed contributions at 912.
