Monzon eyes stock investment loan restoration

PHILIPPINE Stock Exchange (PSE) President and Chief Executive Officer (CEO) Ramon S. Monzon said he is in talks with the country’s primary social insurance providers to revive the stock investment loan program, potentially linking it to the personal equity and retirement account (PERA) to increase participation in the market.

“I talked to the SSS (Social Security System) and GSIS (Government Service Insurance System). I’m trying to convince them to restore the stock investment loan,” he told reporters on Friday last week.

“The way it was structured before was if you bought shares, you had to buy them in the name of SSS,” he said.

Mr. Monzon was referring to the SSS past program called the Stock Investment Loan Program (SILP), where members borrowed funds to buy company stocks. Today, SILP mainly involves the Option to Sell Shares of Stocks Program, where members with unpaid SILP or Privatization Fund Loan Program (PFLP) balances sell shares through SSS-accredited brokers to clear debts.

“We’re trying to see what’s good. We’re trying to see if we can tie this up with PERA, right? You take out a stock loan and put it in PERA,” he added.

PERA is a voluntary retirement savings program that supplements benefits from the SSS, GSIS, and employer-provided plans.

Mr. Monzon described it as beneficial for workers. “We should be pushing all companies to institute PERA for their employees,” he said. “We will be doing that in our next board meeting — I’ll try to get approval for that. It’s good for the employees,” he added.

PERA contributions in the country surged 24% year on year to P491.4 million by end-2024, up from P396.3 million in 2023, according to Bangko Sentral ng Pilipinas (BSP) data.

The number of contributors grew 6.4% to 5,912, with employee contributions dominating at 69.5%, followed by overseas Filipino workers (OFWs) and the self-employed.

In September 2023, the Securities and Exchange Commission (SEC) issued Memorandum Circular No. 14, expanding eligible PERA administrators to include securities brokers, investment houses, and fund managers. DragonFi became the first PERA administrator accredited under this framework in January last year.

Mr. Monzon noted that the program could benefit both employers and employees, particularly under the Capital Markets Efficiency Promotion Act (CMEPA). “CMEPA has made it a game changer. Actually, PERA is very good for companies that have 200 or 300 employees because it is affordable,” he said.

He also cited DragonFi’s co-founder and CEO’s presentation on PERA growth compounding at 6%, matching yields from real estate investment trusts (REITs) and preferred stocks, as a compelling reason for employees. “It became very attractive to us because of that CMEPA,” he said.

“PERA is good for the employees. It is a retention tool and also beneficial for the market,” Mr. Monzon added.

According to DragonFi, a PERA investor contributing P50,000 annually over 30 years could potentially earn P356,000 per year from dividends, assuming an average dividend yield of 5% per year and annual capital appreciation of 3%.

With PERA, DragonFi said Filipinos could invest in a variety of financial products, including stocks, REITs, and unit investment trust funds (UITFs). — Alexandria Grace C. Magno