GSIS reviewing policy on premium-based benefits

SIS reviewing policy on premium-based benefits

THE GOVERNMENT Service Insurance System (GSIS) is reviewing its “unpopular” policy of paying benefits based on premiums contributed and not the number of years of service, officials said.

“The premium-based policy is up for review,” GSIS Chairman Daniel L. Lacson, Jr. told BusinessWorld in a phone interview on Friday. “It is one of our most unpopular policies.”

The Senate committee on government corporations and public enterprises conducted a hearing on proposed GSIS reforms last week.

Government employees have raised the premium-based policy as a primary concern, and GSIS officials have promised they would look into it.

According to Republic Act No. 8291, or the GSIS Charter, a government employee’s benefits is computed based on period of service.

Former GSIS President Winston F. Garcia, however, revised the implementing guidelines of the GSIS Charter during his term, computing employees’ benefits based on premiums paid instead.

“The principle was that you would get what you paid,” Mr. Lacson explained. “You may have served us for 20 years, but only paid remittances for 15 years.”

The reform was probably implemented to allow the GSIS fund to grow, Mr. Lacson surmised.

“It is grossly unfair for you, who have painstakingly... remitted the required premium contributions, to enjoy the same benefits and privileges with those who have been delayed in the payment of their mandated premiums or, worse, have no contributions at all,” the GSIS explained the premium-based policy on its Web site.

Labor groups, however, protested this was a clear violation of the GSIS Charter.

“The deductions from our benefits are huge,” Sandigan ng mga Empleyadong Nagkakaisa sa Adhikain ng Demokratikong Organisasyon (SENADO) President Rosella M. Eugenio told BusinessWorld in a phone interview last Friday.

She illustrated, “Before Garcia’s term, if you were working for 12 years as a contractual worker with unpaid premiums, and 15 years as a permanent employee with paid premiums, you still had 27 years of creditable service.”

Ms. Eugenio added that unbilled premiums were just billed to the employee, with interest.

However, the new computations left the employee with only 15 years of creditable service, immediately halving benefits, such as the basic monthly pension and the 18-month and five-year lump sums.

While GSIS remains committed to reviewing the policies of the previous administration, Mr. Lacson admitted revising the premium-based policy would take a long process.

“It won’t be easy. It will affect GSIS policies (on pensions, lump sums and loans). Other adjustments will have to be made to those too,” he said.

He compared this to the rules on survivorship pension which were revised by GSIS last December.

“That was a stand-alone policy, so it was easy to reverse,” Mr. Lacson said.

Mr. Garcia’s administration had disqualified surviving spouses of deceased GSIS members from receiving benefits if they were gainfully employed. It was reversed by the new GSIS board.

Mr. Lacson said the GSIS balance sheet was still being finalized. Once the government agency’s financial situation becomes clearer, GSIS would have a better idea of its capacity to reverse the premium-based policy.

“As of the last report, the fund’s actuarial life was until 2064. But since the rules on survivorship pension were changed, allowing an estimated 300,000 members to avail of survivorship benefits, this took 14 years off GSIS’ actuarial life” Mr. Lacson said.

But he emphasized GSIS would always follow the spirit of the law, and extending the fund’s actuarial life would only be secondary to that. -- Diane Claire J. Jiao

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