The Philippine Stock Exchange Inc. (PSE) plans to persuade state-run pension funds—the Social Security System and the Government Service Insurance System—to revive a stock investment loan program to increase trading liquidity and deepen the local capital market.
PSE president and chief executive Ramon S. Monzon said the program previously allowed pension fund members to invest in shares held in trust by the funds, but was suspended after losses during the Asian and global financial crises.
The exchange is now studying a new structure that could link the program with the Personal Equity and Retirement Account (PERA), a voluntary retirement savings scheme. Monzon said PSE will seek board approval to encourage companies to adopt PERA for employees, with investments directed to dividend-paying stocks and real estate investment trusts.
PERA uptake remains low, with only about 6,000 accounts after eight years, according to the Bangko Sentral ng Pilipinas. Monzon said channeling PERA funds into equities could generate average annual returns of around 6 percent, improve employee retention, and provide a stable source of long-term capital for the stock market.
Regulators expect participation to rise following the Capital Markets Efficiency Promotion Act, which grants additional tax deductions to employers contributing to PERA. The Securities and Exchange Commission said the law will help mobilize long-term savings, increase market liquidity, and strengthen the country’s capital markets.
