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Major Fiscal Problems of the GSIS.pdf
1. THE CASE OF GOVERNMENT SERVICE INSURANCE SYSTEM:
MAJOR FISCAL PROBLEMS
OF THE GSIS
Presented by Group No. 3
Sheryl F. Mari
Ma. Remedios D. Malang
Aldin B. Mari
Aeren Nicole E. Ocampo
Valerie Bernel D. Palacio
3. INTRODUCTION One of the major social protection institutions in the
country is the Government Service Insurance System
(GSIS). The GSIS was primarily established for the
wage earners in government employment. Being a
government entity, the GSIS have had to learn how to
strike a careful balance between achieving
organizational goals and political aspirations at the
same time.
The goals of this study is to give more details of its
social protection programs and have a
comprehensive review of fiscal policy efforts of GSIS
in social protection.
4. HISTORICAL BACKGROUND
One of the oldest social security programs in the country still in existence is
the Government Service Insurance System, also known as GSIS, which has a
mandate providing a range of social security benefits.
On May 31, 1937, it formally began operations specializing solely in
providing life insurance. In 1951, old-age, invalidity, disability, and survivorship
payments were added, transforming it into a more complete social insurance
program.
The Government Service Insurance Act of 1997, also known as Republic Act
(RA) 8291, is one of the landmark pieces of legislation that modernized the
GSIS-managed social security program for government employees.
GSIS REVIEW
5. Created by Commonwealth Act No. 186 and Republic Act No. 8291 (GSIS Act of 1997),
GSIS is a social insurance institution that provides a defined benefit scheme under the
law. It insures its members against the occurrence of certain contingencies in exchange
for their monthly premium contributions.
GSIS members are entitled to an array of social security benefits, such as life insurance
benefits, separation or retirement benefits, and disability benefits.
GSIS is also the administrator of the General Insurance Fund by virtue of RA 656
(Property Insurance Law). It provides insurance coverage to government assets and
properties that have government insurable interests
MANDATE
GSIS REVIEW
6. COVERAGE
The GSIS covers all government workers except:
a.Members of the Judiciary and Constitutional Commissions who are
covered by separate retirement laws;
b. Contractual employees who have no employee-employer relationship
with their agencies;
c. Uniformed members of the Armed Forces of the Philippines and the
Philippine National Police, including the Bureau of Jail Management and
Penology and the Bureau of Fire Protection
The GSIS does not include:
a. Barangay and Sanggunian officials who are not receiving fixed
monthly compensation;
b. Employees who do not have monthly regular hours of work and are
not receiving fixed monthly compensation
GSIS REVIEW
7. BENEFITS AND SERVICES
The principal benefi t package of the GSIS consi st s of com pulsory
and optional life insurance, r etir ement, s eparat i on, and Em ployee’ s
Compensation ( EC) benef its.
Among the loan pr oducts that GSIS member s can avai l are t he
Multi-purpose L oan, Policy L oan, Enhanced Emerg ency Loan,
Enhanced Pensi o n L o an, and Pensioner s Emerg ency Loan pro gram s.
GSIS REVIEW
8. CORPORATE SOCIAL
RESPONSIBILITY
The GSI S' s corporate ci ti zenshi p i ni ti ati ves are centered on
educati on, envi ronmental protecti on, cul tural promoti on,
di saster preparedness, and outreach. These i ni ti ati ves create
more opportuni ti es for GSI S empl oyees to gi ve back to
soci ety.
The GSI S Board of Trustees offi ci al l y adopted, approved, and
affi rmed the GSI S CSR Statement and CSR Acti vi ti es vi a Board
Resol uti on No. 147 on December 12, 2013, as part of the
organi zati on' s i mproved corporate ci ti zenshi p and soci al
mi ssi on.
The goal i s to contri bute to respectabl e soci o-ci vi c i ni ti ati ves
i n the fol l owi ng ways whi ch promotes a cul ture of change
i nsi de the GSI S:
GSIS REVIEW
12. OVERVIEW ON
GENERAL INSURANCE
The Government Service Insurance System, by virtue of Republic Act 656 and as
amended by Presidential Decree 245, is mandated to insure all properties,
assets, and interests of the government against any insurable risk. Thus, GSIS
offers various non-life insurance products that provide protection to both
institutional and individual clients.
All government involvement or exposure in corporations, partnerships, joint
ventures, associations, and the like in whatever form like loans, credit
guarantee, tax incentives, or discounts, donations, investments, financing, and
franchising, shall be interpreted as government interest and these operations,
partnerships, joint ventures, and associations shall be required to obtain their
insurances and bonds from GSIS.
GSIS REVIEW
13. GENERAL INSURANCE AND
OTHER GSIS LAWS
Presidential
Decree No. 245
Administrative
Order No. 33,
s. 1987
Commonwealth
Act No. 186
(Government
Service
Insurance Act)
Republic Act
No. 656
(Property
Insurance Law)
Republic Act
No. 660
GSIS REVIEW
14. GENERAL INSURANCE AND
OTHER GSIS LAWS
Republic Act
No. 3593
Republic Act
No. 4968
Republic Act
No. 6111
Republic Act
No. 1616
Republic Act
No. 7699
GSIS REVIEW
15. GENERAL INSURANCE AND
OTHER GSIS LAWS
Presidential
Decree No. 1146
Presidential
Decree No.
1368
Presidential
Decree No. 1519
Presidential
Decree No. 626
Presidential
Decree No. 1641
GSIS REVIEW
16. GENERAL INSURANCE AND
OTHER GSIS LAWS
Implementing
Rules and
Regulations of
Republic Act
No. 8291
Republic Act
No. 8291
GSIS REVIEW
18. G-CARE PLANS
MYSHIELD
The lowest insurance
premium rate against
personal accident in
the market with
about Php40 for
every Php50,000
annual coverage.
HOMESHIELD
Provides insurance
coverage against
fire.
AUTOSHIELD
Provides a
comprehensive
insurance coverage
for vehicles at 20%
less than the
prevailing rate in the
market.
GSIS REVIEW
19. The House of Representatives unanimously approved the Third and Final Reading House
Bill No. 5509 with 192 affirmative votes which would amend Republic Act No. 8291, also
known as "The Government Service Insurance System (GSIS) Act of 1997," to lower the
voluntary retirement age for government employees from 60 to 56 years old.
That when enacted, the bill will specifically change Section 13-A of RA 8291. If a GSIS
member retires from service, he or she will be eligible for GSIS retirement benefits
provided that they meet the following criteria: 1) has rendered at least 15 years of service;
2) is at least 56 years of age at the time of retirement; and 3) is not receiving a monthly
pension benefit from permanent total disability.
MAJOR FISCAL PROBLEMS OF GSIS
Lowering Optional Retirement Age of Government
Workers to 56
1.
20. Will the monthly pension also decrease if the
retirement age is lowered?
Yes, because their years of service would be fewer and their monthly salary lower. Both
could have been higher had members stayed on for four more years. If members retire at an
earlier age, the corresponding pension computed from their present salary will also
decrease.
Example:
A 40-year-old employee of the Department of Education with 11 years of government
service has a monthly salary of Php22,810.61.
If such an employee completes 15 years of service or more, and opts to retire at age 56,
the monthly pension is estimated to reach only Php22,018.48. This is lower by about
Php5,301.21 or 19.40% lower than a monthly pension of Php27,319.69 that he or she could
have received at a retirement age of 60.
21. List of Bills proposed to lower the
retirement age of government employees
24. On December 18, 2018, GSIS started accepting applications for its one-time condonation
and restructuring program from members who are already out of government service to
settle their outstanding loan balances in full or in part. The program is dubbed GSIS
Program for Restructuring and Repayment of Debts (GSIS-PRRD). Under the program,
GSIS will condone all unpaid penalties on the member’s outstanding balance, with the
remaining balance restructured at an interest rate of 10% per annum compounded
annually.
3. Loan Condonation Program for
Inactive Members
25. PRRD covers the following service loans:
Salary Loan
Restructured Salary Loan
Enhanced Salary Loan
Emergency Loan Assistance
Summer One-Month Salary Loan
Member’s Cash Advance / eCard Cash Advance / eCard Plus Cash
Advance
Conso-Loan / Enhanced Conso-Loan
Emergency Loan
Home Emergency Loan Program
Study Now, Pay Later at Fly PAL, Pay Later loans and did not avail of the
condonation program in 2014
Educational Assistance Loan (EAL) and did not avail of EAL II
Stock Purchase Loan and did not avail of the condonation program in 2013
Policy Loan (Regular and Optional)
GSIS Financial Assistance Loan (GFAL) for DepEd Personnel
26. The following loans are not covered by
PRRD:
Pension Loan
Pension Emergency Loan
Pensioner Restructuring Loan under the Choice of Loan
Amortization Schedule for Pensioners (CLASP)
Housing Loan
27. Negative Effects of Unpaid GSIS
Loans on Members’ Future Benefits
State pensi on fund Government Servi ce I nsurance System (GSI S) has
urged i ts members to ensure rel i gi ous and accurate l oan repayment i n
order to avoi d negati ve consequences on thei r soci al i nsurance
benefi ts. Al l member-borrowers are remi nded to ensure that thei r GSI S
l oans are pai d correctl y and on ti me to avoi d negati ve consequences
of unpai d l oans on thei r soci al i nsurance benefi ts. Unpai d l oans i ncur
i nterests and penal ti es. These wi l l be deducted from reti rement or
separati on benefi ts that mi ght yi el d l i ttl e or zero proceeds.
Members wi th overdue l oan accounts may avai l of the Enhanced Conso-
Loan Pl us, whi ch wai ves al l i nterests, penal ti es, and surcharges on the
exi sti ng sal ary l oan accounts. They are qual i fi ed to appl y for the l oan
i f they are permanent i n empl oyment status; have no pendi ng
admi ni strati ve or cri mi nal case; are not on l eave of absence wi thout
pay; have a net take-home pay of Php 5, 000 after deducti on of monthl y
premi um contri buti ons and l oan amorti zati ons.
28. RECOMMENDATIONS
Lowering of Optional
Retirement Age from
60 to 56
1. Increase significantly the premium contribution rate
2. Allowing voluntary contributions for GSIS members
If the retirement age is lowered, so does the monthly
pension. A propose to review and revise the premium
contribution rate is needed justifying the reasons for
their high premiums. Moreover, allow voluntary
contributions for GSIS members so as not to affect and
sustain the fund life of GSIS as well. These will address
the issues of the negative impact on the SIF of GSIS’s
actuarial life, additional cost and decrease in fund
contributors.
29. Voluntary
Contributions of
Members
Amend and allow the voluntary continuation of
contribution of the previous member as this will also
provide a continuing support fund for the agency and
will also benefit the previous government employees
who have also served and made contribution during
their service.
Loan Condonation
Program for Inactive
Members
All member-borrowers must pay the correct loan
amortizations on time. This will preserve their future
benefits, which they have earned and should enjoy for
devoting their prime in government service.
Responsible borrowing keeps the pension fund healthy.
Up-to-date loan payment makes the GSIS fund
adequate to lend to other members as well.
