Salceda’s Intergenerational Legacy Law for Filipinos

New Philippine Law Aims To Revolutionize Retirement Savings through capital Market Reforms

Manila, Philippines – A New law In The Philippines, known as the Capital Markets Efficiency Promotion Act (CMEPA), is set to overhaul the nation’s retirement savings landscape.Signed into law on May 29, 2025, by President Ferdinand Marcos Jr., The CMEPA introduces important reforms aimed at bolstering retirement security for Filipino workers. This groundbreaking legislation seeks to address critical gaps in the country’s labor system, where adequate retirement provisions have long been a concern.

Key Provisions Of The Capital Markets Efficiency Promotion Act (CMEPA)

The Capital Markets Efficiency Promotion Act (CMEPA) focuses on expanding the Personal Equity and Retirement Account (PERA) system. A Key Feature allows employers to claim an additional 50 Percent Tax deduction for PERA contributions, provided they match or exceed their employee’s contributions. This Incentive is designed to encourage both employers and employees to invest in retirement savings.

For instance, if An Employee contributes P10,000 to PERA, and the employer matches this with another P10,000, the employer can deduct an additional P5,000 as an expense. At a Corporate Income Tax Rate of 25 Percent, This reduces the employer’s tax liability by P1,250, supplementing the usual deductions for employee benefits.

Crucially, This Incentive applies only if the employer’s contribution equals or surpasses the employee’s share. The Government hopes to encourage widespread adoption of PERA and secure better financial futures for Filipino workers by incentivizing employer participation.

Pro Tip: Employers looking to maximize tax benefits should align their PERA contributions with their employees to take full advantage of the new tax deduction incentives.

Reviving The Personal equity And retirement Account (PERA) System

Despite being created in 2008, The Personal Equity And retirement Account (PERA) system has seen limited adoption.Data indicates that by the end of 2024, There Were only 5,945 Active Accounts with P491.4 Million in Assets. The New Law Aims to revitalize PERA through more significant incentives and broader institutional support.

Projections suggest that, with these reforms, PERA assets could surge to P140.6 Billion by 2034, attracting 1.48 Million Contributors. This represents a substantial increase in retirement savings, promising greater financial security for many Filipinos.

Impact On The Economy And Government Revenue

While The Reform entails P6.7 Billion in Foregone Government Revenue over 10 Years, It is expected to recover at least P4.8 Billion through capital gains taxes, increased financial sector activity, and decreased reliance on future public pensions.This economic stimulus is anticipated to benefit both current savers and the broader economy.

The Long-Term Impact will be felt as today’s Workers begin to retire,with the economy benefiting from higher savings rates,deeper capital markets,and stronger long-term investments. These factors collectively contribute to a more stable and prosperous financial habitat.

Capital Market Reforms

The Capital Markets Efficiency Promotion Act (CMEPA) also introduces vital reforms to capital market taxation, including:

• Reduction of the Stock Transaction Tax from 0.6 To 0.1 Percent.
• Removal of Documentary Stamp Tax on Mutual Funds and Unit Investment Trust Funds.
• Tax Exemption on Income from Redemption of Mutual Fund and Unit Investment Trust Fund Units.
• Standardization of the Final withholding Tax on Interest Income at 20 Percent.
• Flat 15 Percent Capital Gains Tax on Sales of Foreign Corporate Shares.

These Changes are Designed to reduce the cost of investing and make long-term savings more accessible to ordinary Filipinos, encouraging greater participation in the capital markets.

Three-Pillar Approach To Retirement Reforms

The Expanded Personal Equity And Retirement Account (PERA) is part of a three-pillar approach to retirement reforms, wich includes securing a universal social pension, expanding benefits for senior citizens, and fixing the corporate pension system by enabling employer-based retirement savings.

The Government aims to create a comprehensive retirement system that protects the poorest, allows working filipinos to build their own savings, and ensures a fairer shot at a decent life in old age.

Pillar	Description	Goal
Universal Social Pension	Government-funded pension for all citizens	Protect the poorest
Expanded Senior Citizen Benefits	Increased support and services for elderly individuals	Improve quality of life for seniors
Corporate Pension System Reform	Employer-based retirement savings programs	Enable employer-supported retirement savings

Do you think these new measures will significantly improve retirement prospects for Filipinos? What other steps could be taken to enhance retirement security?

understanding Retirement Planning In The Philippines: A Deeper Dive

Retirement Planning in the Philippines requires careful consideration, given the limited social security benefits and the rising cost of living. The Capital Markets Efficiency Promotion Act (CMEPA) represents a step forward, but individuals should also explore other options.

These Options include private pension plans,real estate investments,and diversified investment portfolios.Financial literacy is crucial, and seeking advice from qualified financial advisors is highly recommended. Recent Data from the Bangko Sentral ng Pilipinas (BSP) indicates a growing interest in investment products among Filipinos, highlighting an increasing awareness of the need for retirement planning.

Did You Know? According to a 2023 Study by the Philippine Statistics Authority (PSA), approximately 60% of Filipino senior citizens rely on their families for financial support, underscoring the importance of self-reliant retirement savings.

Moreover,Overseas Filipino Workers (OFWs) should pay special attention to retirement planning,as they frequently enough face unique challenges,including fluctuating exchange rates and varying social security benefits in their host countries. Creating a robust financial plan is essential for a secure retirement.

Frequently Asked Questions About Capital Markets Efficiency Promotion Act (CMEPA)

• What is the Capital Markets Efficiency Promotion Act (CMEPA)?

  The Capital Markets Efficiency Promotion Act (CMEPA) is a new law in the Philippines designed to enhance retirement savings and stimulate the capital market through various tax incentives and reforms.

• How does the expanded Personal Equity and Retirement Account (PERA) work?

  The expanded Personal Equity and Retirement Account (PERA) allows employees to build private savings for retirement, with employers now able to claim a 50% tax deduction on their PERA contributions if they match or exceed the employee’s contribution.

• What are the benefits of the capital market reforms?

  The Capital Market Reforms include reduced stock transaction taxes, removal of documentary stamp taxes on mutual funds, tax exemptions on income from mutual fund redemptions, standardized final withholding tax on interest income, and a flat capital gains tax on foreign corporate shares, making long-term savings more accessible.

• What impact will the CMEPA have on government revenue?

  While the Capital Markets Efficiency Promotion Act (CMEPA) is projected to result in P6.7 billion in foregone government revenue over 10 years,it’s expected to recover at least P4.8 billion through capital gains taxes, increased financial sector activity, and reduced reliance on future public pensions.

• Why was the Capital Markets Efficiency Promotion Act (CMEPA) needed?

  The Capital Markets Efficiency Promotion Act (CMEPA) was needed because a small percentage of companies offer formal retirement plans. The Social Security System (SSS) provides an average pension that is insufficient for basic needs. The CMEPA aims to fill this gap and ensure a more dignified retirement for Filipino workers.

This article provides general data about financial matters. Consult with a qualified financial advisor for personalized advice.

Share your thoughts in the comments below and let us know how you plan to take advantage of these new retirement savings opportunities!

How can the proposed Intergenerational Legacy Law effectively address the potential for intergenerational conflict regarding the allocation of family assets, ensuring fairness and preventing future disputes?

Salceda’s Intergenerational Legacy Law: Shaping the Future of Filipino Families

Understanding the Core Tenets of the Intergenerational Legacy Law

The proposed Intergenerational Legacy Law, championed by Congressman Joey Salceda, represents a transformative shift in Philippine policy. Its primary goal is to foster long-term sustainable development by integrating the needs of future generations into present-day decision-making. This legal framework aims to address issues such as economic development, environmental protection, and social equity with a focus on intergenerational fairness, covering topics like asset protection and family wealth succession. The law’s central philosophy underscores the interconnectedness of societal aspects and the need for holistic planning to ensure a prosperous future for Filipino youth and future generations.

Key Provisions and Components

The legislation encompasses several key provisions, designed to secure a stable and prosperous future for the Filipino people:

• Sustainability Principles: Incorporating principles of environmental sustainability into government policies and projects to mitigate climate change risks.
• Long-Term Planning Framework: Establishing a framework for long-term planning, ensuring investments in infrastructures that benefit generations such as investment in renewable energy sources.
• Education and Skills Development: Investing in education and skills development initiatives,including programs to bridge the skills gap and prepare Filipinos for the future workforce – particularly in emerging industries like digital technology.
• Financial Literacy and Planning Measures: Facilitating and promoting financial literacy programs for all age groups to address wealth inequality and secure family’s financial future.

Thes elements work in tandem to provide a robust foundation for building a more equitable, prosperous, and sustainable Philippines, in line with sustainable development goals.

The Benefits: Securing a Better Tomorrow

The implementation of the Intergenerational Legacy Law offers numerous benefits for Filipino citizens and the nation as a whole. These include improvements in several key areas:

Economic Growth and Stability

By focusing on long-term planning and investment, the law proposes to promote sustained economic growth. Key initiatives include:

• Investment in sustainable infrastructure, leading to higher productivity.
• Stronger protection for investments, encouraging both domestic and foreign interest.
• Focused implementation of skills development, creating a workforce that is prepared for future jobs.

Enhancing Environmental Protection

Prioritizing environmental preservation is a cornerstone of the law. This is achieved through:

• Regulations to mitigate climate change and its impact on vulnerable locations in the Philippines.
• Investments in renewable energy.
• Support for sustainable ecological practices, particularly protecting natural resources for future generations.

Social Equity and welfare

The law aims to enhance social equity via:

• Increased access to resources and promoting social mobility.
• Education programs focused on underserved communities.
• Safeguards and security for vulnerable populations and ensuring the benefits reach the most needed families.

Practical Applications and Real-World Examples

While the law is still in the proposed stage,similar types of sustainable approach have already been witnessed in Philippine policies:

Case studies and Real-World Projects

Several communities in the Philippines have started applying the principles of the law to ensure sustainability and intergenerational fairness:

Exmaple: The Barangay San Carlos in Manila implemented community-based waste management system, which aims to minimize the waste disposal. The program invests in educational outreach focused on minimizing waste and environmental protection, ultimately promoting a sustainable approach to city living and environment.

These cases are relevant in illustrating the broad impact of intergenerational planning and management.

Addressing Potential Challenges

While the Intergenerational Legacy Law promises various benefits, its actual implementation will definitely have hurdles:

Overcoming Roadblocks

Potential challenges and how they can be addressed:

Challenge	Proposed Solution
Securing Funding Allocation	Prioritize sustainable investment and attract relevant foreign investment to support projects outlined in the Intergenerational Legacy Law.
Political Will and Consistency	Secure the support of cross-party and institutional alliances that sustain long-term commitment to implementation.
Public Awareness and Stakeholder Engagement	Develop campaigns to make the general public aware and educated on the benefits of the law, while ensuring its participation through town halls and forums.

conclusion: The road ahead

The Intergenerational Legacy Law seeks a future centered upon the Filipino families’ and the nation’s commitment to secure a thriving future for its families by integrating sustainable development goals.