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Sponsorship Speech On GSIS Members Rights and Benefits Act of 2011

Sponsorship Speech On GSIS Members’ Rights and Benefits Act of 2011 (Senate Bill No. 2854, under Committee Report No. 41) By Sen. Ralph G. Recto

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110 views10 pages

Sponsorship Speech On GSIS Members Rights and Benefits Act of 2011

Sponsorship Speech On GSIS Members’ Rights and Benefits Act of 2011 (Senate Bill No. 2854, under Committee Report No. 41) By Sen. Ralph G. Recto

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Ralph Recto
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Sponsorship Speech On GSIS Members Rights and Benefits Act of 2011

(Senate Bill No. 2854, under Committee Report No. 41)


By Sen. Ralph G. Recto
Chairman, Committee on Government Corporations and Public Enterprises
October 3, 2011

Mr. President:

Every month, the Senate forks over to its landlord the rent for the office space it occupies.

But theres a far bigger amount that the Senate remits to the Government Service Insurance System
every year, and it is the Billions of pesos in national government share of the premium payments of
its employees.

And the manner by which the Senate shells out money for rent and for pension contributions of
government workers is the same without question and without scrutiny.

The fact is that while we huff-and-puff over the minutest detail in the proposed national budget
involving miniscule amounts, the gargantuan allocation for the government counterpart to its
employees contribution to the GSIS has been off-limits to congressional alteration.

The stock excuse is that Retirement and Life Insurance Premiums or RLIP which is how employer,
meaning the national government contribution to the said pension fund is called in budget-speak
are automatically appropriated.

But it doesnt mean that when a fund is automatically appropriated we likewise default automatically
on our prerogative to review it, because, in budgeting what may be shielded from
legislative modification is not, however, spared from legislative scrutiny.

And yet, year in - year out, both the bicameral and the bipartisan attitude have always been tasked
to fuss over tiny allocations for small agencies while giving a free pass to the titanic earmarks for
the GSIS.

Take for example the 2011 national budget.

The adjusted amount for RLIP a.k.a. the GSIS employers contribution this year is P22.42 Billion
which should land it among the Top 10 recipients of appropriations.

That amount is 24 times the budget of the Department of Energy; 15 times the budget of the
Department of Tourism; 9 times that of the Department of Trade and Industry; more than thrice that
of the Department of Justice; and twice that of the Department of Foreign Affairs.

What we will hand over on a silver platter to GSIS this year is P6 Billion more than what we will
spend for agrarian reform, and P8.8 Billion higher than what all the courts in the land will receive.

And if you will tally the budgets of all the state colleges and universities in the land, 110 of them all,
the RLIP for GSIS will still be bigger by about P400 Million.

Yet the fact that our landlord is in the Top 10 list even escapes the DBM itself as it probably reckons
that automatic appropriations must not be counted in the column of recipients.

This perennial omission is what has clothed the GSIS perpetual earmark in the budget with a Dont
ask, dont tell mantle.

But, Mr. President, we must begin to ask, and they must begin to tell because, first, the right to ask
for money carries with it the duty to explain how it will be used; and, second, we cant have a budget
process which allows agencies with huge allocations to speed through courtesy lanes while those
with smaller budgets are made to crawl through the eye of the needle.

If government attaches a lot of conditions to a 1,000-peso monthly Conditional Cash Transfer grant
and monitors a beneficiarys compliance, then why not the RLIP which is basically a cash
transfer unencumbered by stipulations and not tied to conditions?

We must begin to ask, and they must begin to tell because GSIS contributions are a payroll
tax which employees cant evade and a funding obligation which their employer cant avoid.

Consider the following:

On top of the national government or employers share of P22.42 Billion in 2011, 889,861
government employees will chip in P16.82 Billion as their share, bringing the projected GSIS haul
to P39.4 Billion this year.

And let me explain that this is for the NG sector alone, and does not include remittances from LGUs
and the GOCCs.

To give you a picture on how much GSIS earned from RLIP and other insurance, including from
GOCCs and LGUs, it posted revenues of P63.6 Billion in this area of business a year ago.

So for this year, average total contribution per member employed by the national government will
reach P44,092 of which P25,196 will be shouldered by the government, and P18,897 by the
employee.

For every peso an employee earns, nine centavos is deducted as GSIS contribution to which 12
centavos is added by the government as equity.

Thus, it can be said that as a payroll tax, the GSIS bite, at 21 percent, is VAT almost twice over; the
only difference is that the 12 percent employer tab is booked in the national budget as essentially a
Tax Expenditure Fund.

Because three-fifths of the total premium contribution is shouldered by taxpayers, then it can also be
said that every member doesnt contribute to his pension alone, he has 108 co-payors who help
him.

This makes a GSIS policy a joint venture of one public sector worker and 108 private citizens.

But the two-fifths that the employee shoulders is no less a heavy burden, as it is greater than the
average citizens tax burden of P13,154 this year.

There, however, ends the difference because if tax is what one pays for membership in an organized
society, the GSIS payroll tax of not too long ago was what one paid for membership in organized
chaos.

Mr. President:

We must ask and they must tell because the P25,196 that the national government spends every
year to build a retirement nest egg for one employee is 63 I repeat 63 times more than the
annual per capita spending of P401 for health.

Something is wrong when we spend 63 times more to inoculate from the vicissitudes of retirement
those who will be old in the future than what we spend on the immunization from diseases of those
who are in the dawn of life today.

We must ask and they must tell because what the national government spends in a year for the
retirement of one employee in the future is more than twice than what it spends to send a child to
school today.

So my sponsorship speech today consists of two appeals, one is for this body to start
summoning payroll tax collectors like GSIS, Pag-IBIG and PhilHealth to budget hearings so we can
ask and they can tell what they will do with the money that the countrys biggest employer, the
national government, will remit to them, which next year will reach P29.2 Billion.

The other is to seek your approval of the bill at hand, the core purpose of which is to improve the
Charter of the GSIS so it in turn will improve its service to its members.

First let me briefly touch on the anatomy of the GSIS.

The GSIS was created in 1936 under Commonwealth Act 186 as a means to secure the future of all
government employees.

It administers a pension fund that provides a raft of social security benefits like compulsory and
optional life insurance as well as retirement, disability, accident and death benefits which a member
or his survivors can hang on to in case a tide of misfortune tries to sweep them away.

As of end of 2010, the GSIS had 1,371,219 members, about 41 percent of whom, or 563,550,
were from the Department of Education, mostly teachers. The second biggest bloc came from local
governments with 387,659 members or about 29 percent of total membership.

Other NG agencies were third, with a membership share of 20 percent while GOCCs and GFIs
combined for 6.8 percent. Judiciary had 33,622 members which corresponded to 2.45 percent of the
total and the military brought up the rear with a small contingent of 15,328 or a little over than 1
percent share.

The GSIS funds remain healthy with an actuarial life of 40 years or until 2051 based on its 2009
year-end data.

At close of fiscal year 2010, GSIS had total assets amounting to almost P579 Billion. Of this amount,
P83.5 Billion consisted of cash and cash equivalents while investments amounted to P445.7 Billion.

In its 2010 Financial Report, GSIS posted total reserves of P540 Billion and surplus of P22 Billion.
As to income, gross revenues of the GSIS from January to May of this year amounted to P44.25
Billion, of which P28.27 Billion came from insurance, P6.67 Billion or 15% from loans, P9.18 Billion
or 20.8% from investments, P63 Million from investment properties while P56 Million or 0.13% from
other revenues.

While normally these figures would stoke stakeholder praise and reap accolades, the
GSIS management, ironically, suffers from low approval rating from the public it serves.

This could be the result of the distrust generated by past controversial programs which created deep
wounds that require a longer healing time, notwithstanding the changing of the guards and the
installation of a board sensitive to members plight.

Foremost among these irritants was the GSIS computerization program, which was more prone to
crashes than buses at Commonwealth Avenue, resulted in processing delays, pension gaps, the
deletion of important files, the non-posting of records, and the uploading of erroneous data.

Other lightning rods of criticisms were the scrapping of survivorship benefits, the stoppage of the Pre
Need Educational Plan, the introduction of the Auto-CLIP Policy which is said to cause arbitrary
deductions from members benefits of alleged unpaid loans.

There were also policy amendments that led to the diminution of benefits such as the tectonic-shift to
a premium-based policy which pegs retirement benefits to premium payments instead of a members
years of service.

Although the said shift may have basis in law, as Section 41 of RA 8291 empowers the GSIS to
conduct continuing actuarial and statistical studies and valuations to determine the financial
condition of the GSIS and use the findings to re-adjust the benefits, it still fomented discontent
among the members ranks.

Thankfully, the new management has reversed previous policies such as the restitution of
survivorship benefits, which, if combined with its inculcation of a culture of quality customer service
among its employees, may soon elevate client satisfaction.

However, the work to strengthen the GSIS so it can meet the challenges of the future shouldnt be
left to its management alone.

Central to the retooling of the GSIS is the plugging of a big gap in its Charter, and that is the
absence of Members Rights, which is akin to a constitution of a country without a Bill of Rights.

A pension fund, especially one that is partially nourished by public funds, should be built on the
enumeration of the rights of its members. The GSIS, sadly, has none, which is its greatest handicap.

Without a declaration of the rights of members, there will always be the temptation to view
trusteeship as a mandate from heaven, by holders who will treat their acts as beyond reproach and
review, and who will think that they are answerable to the appointing power and not to the members
whose forced contributions fill the coffers of GSIS.

Its time to enshrine these rights in the Charter of the GSIS so they will serve as a constant reminder
of the true power dynamics in this institution that its members are the true bosses, that the fund is
common proprietorship, and not a financial encomienda run by encargados appointed by His or Her
Excellency.

Senate Bill No. 2854 catalogues these rights and makes them part and parcel of the GSIS Charter.
Among these are:

Right to Information

If we examine our cellphone bill today, every minute of every call we make, where and when we
make it, the number of text messages we send, are captured and documented.
The water we consume is metered, every drop rounded off to the nearest cubic meter.

Our banking transactions are faithfully recorded too, either in old-style passbooks or new-age voice
recording we can remotely prompt through a telephone.

But when it comes to GSIS remittances, which could just be 12 a year, or one for each month,
a member cannot access it. While his bank will regularly mail him a monthly statement
of transactions, he doesnt get one from GSIS.

Without this history of transactions, a member will not know the level of his contributions. With the
passage of this bill, the GSIS is expected to mail regular statement of accounts, which will serve as a
receipt of contributions remitted.

On this matter, GSIS cant invoke poverty of either ideas or resources.

If Maynilads and Manila Waters combined 2.57 Million customers, Metrobanks 3.14 Million
depositors, Globes 1.14 Million postpaid subscribers, Meralcos 4.84 Million customers can each
receive a statement of transactions monthly, why should GSIS 1.3 Million members not get the
same?

When a members old air-conditioner breaks down, he can dial the manufacturers 24-hour call
center for help. There is none for GSIS, which is ironic as it holds office in an area where BPOs are
mushrooming.

The best way to empower GSIS members is to educate them. The GSIS will also benefit from a well-
informed clientele as confusion - arising from lack, wrong or unclear information on what benefits
they can receive, can be avoided.

Information to be conveyed must be in various media, because the pitfall in using only one mode is
that members familiarity with information technology varies. So, while some would prefer electronic
copies of GSIS policies, membership data, premium remittances, or loan payments, all of which
must be given them upon demand, others would be more at home with their printed versions.

Right to Courteous and Responsive Service

Members have the right to courteous and fast service. One should not have to wear sunblock in
going to a GSIS office or lather his feet with mentholated oil. An agency that grosses P96 Billion a
year can certainly afford comfortable offices and pay frontline personnel who will render prompt
service and provide accurate information with a smile.

Right to Expeditious Processing of Claims

In this age of the Internet, documents should no longer move in glacial pace. When a sick member
applies for benefits so he can have money to make him well, it shouldnt be released, belatedly, in
time to settle his burial debts.

Members must also be protected from diminution of benefits that may arise with the passage of a
law or regulation. The GSIS board is allowed to readjust benefits but not inferior to what are currently
enjoyed.

Benefits arent supposed to be of the shrunk-to-fit type. On the contrary they should be of the
expandable variety. And for those who fear that allowing benefits to remain static in the face of a
growing number of beneficiaries will reduce the funds actuarial life, they should be reminded that
inflation will do a better job than the board in eroding their value.

Right to be Heard

The bill guarantees the right of members to be heard. Sila ang boss dito. When it comes to
feedback, no firewall should stand between management and members. The latter should be
encouraged to participate in dialogues that pertain to proposed new policies and procedures. But the
right to be consulted doesnt carry with it the right to ram proposals which may be popular, but not
right. The avenues for the airing of opinion, redress of grievances, or sending feedback should
include those in the electronic realm and social media. And all of these must be accorded immediate
response.

Right to GSIS Benefits

A member must have the right to receive - on time - the benefits he has qualified to even after
separation from the service. Entitlements must not always bear expiry dates.

And when such benefits are received they should be exempt from all taxes, fees, charges and duties
of all kinds. In short, a payroll tax should not be taxed again.

Also under this section is the grant of the right to choose from the menu of retirement modes, to
change from one mode to another, for as long as no benefit accruing from the original choice has not
been paid.

Special Rights for the Elderly

A part of the GSIS constituency is made up of the Walker Brigade and the Wheelchair Battalion.

This bill provides them access ramps to GSIS services, be they in literal sense like special lanes in
GSIS offices or leniency when it comes to submission of documentary requirements.

Their requests for claims and benefits will be prioritized and those with mobility issues shall be
allowed to use the information superhighway, like the Skype-way for example, in transacting
business with GSIS.

Problem of Non-Remittance of Contributions

Per GSIS, some 287 member-agencies, a third of whom are local governments, are in
arrears over remitting their employees contributions.

The amount involved is P2.38 Billion, interest factored in. But the brunt of this blunder is not borne
by agencies but by the 25,454 affected employees whose privilege to apply for loans and
receive cash dividends has been frozen.

This bill mandates the prompt remittance by agencies of employees as well as employers
contributions to the GSIS.

The agency shall likewise keep track of these transfers, help in the reconciliation of a members
record of payments when disparities arise, and provide documents needed by a member to process
claims.

So that the impoundment of contributions will become an expensive lesson for those who do it,
agencies that delay or default in the remittance of paid contributions may be levied an interest of two
percent per month on the amount retained.

Lifting of Prescriptive Period

There is no reason why employee benefits amortized through the years must carry Best Before
markings.

This bill therefore lifts the prescriptive period for claiming benefits. At present, only life and retirement
claims do not expire after four years from contingency.

In fact, any delay in claiming benefits favors GSIS, as money deposited in the bank earns interest,
so any lag in asking for their release should be met with understanding, not forfeiture.

Settlement of Disputes

Under RA 8291 only GSIS has the exclusive jurisdiction to settle any dispute arising from the grant
of benefits provided in the law.

This set up has given rise to the incongruous situation wherein the GSIS is the one that rules on
cases in which it is the subject of the complaint.

Under this bill, the Regional Trial Court (RTC) shall assume concurrent jurisdiction over these
cases.

Cap on Investible Funds

The proposed law sets a cap of five percent of its investment funds which can be placed abroad.

Under its Charter, GSIS can invest in foreign-mutual funds and in foreign currency deposits or
foreign-denominated debts and financial instruments or assets issued in other countries.

There is no reason for the GSIS to park its funds abroad as investment opportunities in the country
offer better yields, on top of meeting the national need of providing much-needed capital to public-
private infrastructure projects which past experiences show can actually deliver respectable returns.

Board Representation

As much as possible, the GSIS board must mirror the composition of its members. Two additional
members are thus proposed: the Secretary of Education and the Chairman of the Civil Service
Commission.

Installing the DepEd Secretary in the board will give teachers, who make up 41 percent of GSIS
members, a voice in its highest policymaking body.

Electing the CSC Chairman, too, will allow the agency that promotes and protects the welfare of civil
servants carry out its mandate.

Providing Penal Provisions

Congress cannot legislate the specifics of operational efficiency for GSIS. It cannot microlegislate
key result areas as the latter are management prerogatives.

Legislation merely outlines the broad strokes of an ideal, and the fine print is spelled out by officials
who in return get the pay, the perks, and the privileges of the office.

But to ensure that mandates are not abused, trust not violated, and public interest not
harmed, Congress can impose sanctions for any infractions of these.

This bill, Mr. President, has expanded the penal provisions in the GSIS Charter to include the
President and General Manager, in addition to the Board members, as among those liable and
subject to imprisonment and fine for violation of certain provisions of the GSIS Law.

In the case of failure to release benefits on the last day of government service, this bill proposes a
maximum P20,000 fine or a jail time of between six months to one year for the erring official.

The same punishment will be meted out to any official who willfully jeopardizes the collection or
recovery of indebtedness, liabilities and accountabilities.

This bill adds a sweetener to benefits not released on time in the form of two percent interest per
month as recompense for the delay.

While it defines penalties for these infractions, this bill, however, exempts their imposition on
instances caused by force majeure and what lawyers call as insuperable causes.

Mr. President, my dear colleagues:

This bill is not the magic bullet that will slay once and for all the woes that bedevil our landlord,
pension provider and next door neighbor.

When it comes to reforms, best practices by management are always superior to the prose of
legislation.

Fortunately, the new people at the helm of GSIS have initiated moves to improve its services and
prepare it for the future.

This bill provides added impetus to these initiatives and most important, the cornerstone, upon which
the strengthening of the fund must be anchored, and that is the rights due to those who pay the dues
that makes this fund possible.

The rights enshrined will serve as a constant reminder that those who remit must be respected,
those who shell out money must be served, and those who pay compulsory contributions must be
repaid with best customer service.

This is our contribution so that when our fellow GSIS members ask us what we have done to secure
their future, we can tell them that we have passed this bill today.

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