Overseas Filipinos’ access to retirement funds expanded

The Bangko Sentral ng Pilipinas (BSP) has amended its regulations to expand investment opportunities for overseas Filipinos by allowing their retirement funds to freely invest in central bank securities.

Personal Equity and Retirement Account-Unit Investment Trust Funds (PERA-UITFs) will no longer be subject to a 10-percent foreign ownership cap. The policy change recognizes that PERA-UITFs may include overseas Filipinos who are considered non-residents under existing regulations.

“The move reflects the BSP’s continued effort to promote financial health. It helps Filipinos, both at home or abroad, build secure and sustainable retirement savings,” the central bank said. “It also helps develop the country’s private pension system and strengthens domestic capital markets.”

PERA contributions climbed to P491.4 million in 2024, up 24 percent from P396.3 million a year earlier, as more Filipinos joined the voluntary savings program. The number of contributors also increased by 6.4 percent to 5,912 from 5,555.

Employed workers accounted for the largest share, contributing P341.7 million from about 4,211 participants. Overseas Filipinos followed with P82.25 million from 789 contributors, while 912 self-employed individuals invested a combined P67.39 million.

The central bank noted that nine out of 13 PERA-UITFs currently exceeded the 10-percent non-resident ownership limit, preventing them from investing in BSP securities. The updated policy will now allow these funds to diversify their portfolios and enhance potential returns for investors.

Under the revised Section 601-Q of the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions, trust entities are still required to report the participation of non-residents in their UITFs and maintain proper internal controls, monitoring systems, and assurance mechanisms.

Trust entities must continue submitting timely, accurate, and comprehensive reports on non-resident funds to the BSP. They must also make available all relevant documents and information for verification of compliance with the terms and conditions governing access to the BSP Securities Facility.

UITFs are investment vehicles managed by banks and trust companies under BSP supervision. They pool funds from various investors, including those with small contributions, to form a diversified portfolio.

These are comparable to mutual funds, which are regulated by the Securities and Exchange Commission and managed by investment companies.

Source: Manila Times

Remittances dip in August but remain higher year-on-year

Money sent home by overseas Filipinos (OFs) eased in August from July’s seven-month high, Bangko Sentral ng Pilipinas (BSP) data showed on Wednesday.

Personal remittances slid to $3.31 billion from $3.35 billion a month earlier. It was, however, 3.2 percent higher compared to the year-ago $3.21 billion.

Cash remittances alone totaled $2.98 billion, also 3.2 percent higher than the $2.89 billion in August last year but lower than July’s $3.18 billion.

The year-on-year gain, the BSP said, “developed on account of higher inflows from both land-based and sea-based workers.”

Land-based OFs were said to have accounted for $2.35 billion, while the sea-based OFWs added $626 million.

SMIC chief economist Dan Roces noted the pickup in cash remittance growth from July’s 3.0 percent, which he said “suggests that remittance flows have some resilience despite global headwinds, and reflects, in part, a lower comparative base or mild fluctuations in monthly flows.”

A weaker peso, he added, will likely boost remittances as recipients benefit from a more favorable exchange rate.

“Evidence from BSP studies has highlighted the positive role of exchange rate depreciation as a driver of remittances,” Roces said.

“The ‘ber’ months (September to December), when remittances traditionally rise, may buoy the remainder of the year,” he added.

Year to date, personal remittances were up 3.1 percent to $25.51 billion from $24.74 billion, while cash remittances also rose 3.1 percent to $22.91 billion from $22.22 billion in January-August 2024.

The United States remained the top source of cash remittances, accounting for 40.4 percent of the eight-month total. Singapore followed at 7.1 percent and Saudi Arabia at 6.3 percent.

Rounding up the top five were Japan (4.9 percent) and the United Kingdom (4.8 percent).

The BSP noted limitations on data by source, as remittance centers abroad normally send the money through correspondent banks that are mostly located in the US.

Also, remittances sent through couriers are recorded under the country where their main offices are located, which again in many cases is the US.

“Therefore, the US would appear to be the main source of OF remittances because banks attribute the origin of funds to the most immediate source,” the BSP said.

Source: Manila Times

Inflation seen to climb as upside risks linger

Inflation is projected to climb in the coming months as supply-side pressures and the extension of rice import restrictions threaten to push prices higher, which could prompt the Bangko Sentral ng Pilipinas (BSP) to keep policy rates unchanged.

Following the slight uptick in inflation to 1.7 percent in September from 1.5 percent in August, analysts said this may mark the start of a gradual pickup after months of subdued readings, with weather-related disruptions and policy measures posing upside risks toward year end.

HSBC ASEAN economist Aris Dacanay said that while September’s below-consensus figure still falls below the BSP’s two to four percent target range, rice prices would be a key factor to watch in the next few months after the government extended its rice import ban until the end of the year.

“This is a major upside risk to inflation that needs to be monitored,” he said. “But importers have frontloaded their rice orders in anticipation of the ban, leading to ample supply by end-August. If local farmers were able to harvest before Typhoon Nando hit, rice supply may be sufficient to keep prices stable through year end.”

Despite the soft inflation reading in September, HSBC expects the BSP to pause its easing cycle this week before resuming rate cuts in December.

“We think September inflation sets the stage for a quarter-point rate cut in the fourth quarter to 4.75 percent. But we still expect the BSP to wait for more data on gross domestic product and rice prices before continuing its easing cycle,” Dacanay said.

He added that the policy rate could fall to 4.50 percent by the first quarter of 2026 if inflation remains stable.

Economists at Citi echoed the view that the BSP would likely stay on hold in October, even as it eyes further rate cuts toward the end of the year.

“Following tame inflation readings in September, we continue to expect a gradual rebound of the headline into the three-percent handle in 2026,” Citi said.

“Growth concerns could eventually resurface, leading to a cut before the end of the year. However, as economic data is so far mixed, BSP will probably pause in the October meeting.”

Citi expects inflation to stay between 1.3 and two percent year-on-year through the first quarter of 2026 before rising to around 3.5 percent by end-2026.

BPI lead economist Jun Neri also flagged that inflation risks remain tilted to the upside, particularly due to weather disturbances and import restrictions.

Neri expects inflation to stay near two percent for the rest of 2025 before climbing to around 3.5 percent by mid-2026 and nearing four percent by the third quarter next year as base effects fade and supply risks persist.

“With inflation likely to pick up in the coming months, the pace of monetary easing may slow down,” Neri said. “A more conservative approach is justified as cutting rates aggressively could leave the economy vulnerable to inflation shocks that might force a sharp policy reversal later on.”

The BSP has so far cut policy rates by a total of 150 basis points since August 2024, bringing the benchmark rate to five percent.

The Monetary Board is scheduled to hold its final policy review for the year on Dec. 11.

Source: Philstar