Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGTEENTH CONGRESS

First Regular Session
5714

House Bill No.

Introduced by HON. FRANCISCO G. DATOL, JR.,
Representative, Senior Citizens Party-List

EXPLANATORY NOTE

This bill aims to provide for the annual automatic adjustment of the pensions
of retirees from the Philippine Government who are members of the GSIS, by linking
their pensions to the annual inflation rate or movement of the CPI issued by the
Philippine Statistics Authority (PSA).

Tt is known fact that the monthly retirement pensions of member of the
Government Service Insurance System (GSIS) are lifetime benefits computed as of
the date of their retirement. The real value of the pensions, as reflected in the actual
goods and services that their recipients are able to purchase, however, shrinks as
the cost of living rises over the years. As the rise in living costs continues, the
purchasing power of the pensions on which large numbers of persons depend for
their basic needs is progressively and ultimately severely eroded.

Adjustments in pensions of retirees may be made by the GSIS upon approval
by the President in accordance with Republic Act No. 9291 (GSIS Charter). Such
adjustments included those made in 2010, amounting to 1.5%; then in 2013,
amounting to P5,000.00 for those receiving a monthly pension of less than
P5,000.00, and P 200.00 for those getting a monthly pension of more than P
5,000.00 but less than P 8,000.00; and lastly, in 2015, amounting to a one-time
benefit equivalent to a one-month month pension but not exceeding P 12,600.00 for
those whose 2014 cash gift was more than P 10,000.00, and a one month pension
but not exceeding P 10,000.00 for those whose 2014 cash gift was more than P
5,000.00 but less than P 8,000.00.

While these adjustments alleviated the plight of the pensioners, they are not
regular and predictable, being subject to the approval of the GSIS Board. But even if


this would be approved, still the rates of these adjustment lag far behind the actual
rates of inflation, which averaged 4 percent per year over the last 15 years. Further,
the adjusted pensions of the retirees are much less than the monthly compensation
of active employees occupying comparable positions in government service.

To illustrate, a typical public-school teacher who retired fifteen (15) years ago
received a monthly pension of less than P9,000.00, which is barely enough to cover
the minimum family income required for basic sustenance of the P 8,800.00 per
month. The pension of that teacher is only about 49% of the P18,549 monthly salary
of an incumbent teacher.

In the United States of America, the Federal Government and several State
Governments grant their retired public employees Cost of Living Adjustments (COLA)
which are usually linked to Consumer Price Indices (CPIs) or are fixed percentages
of the monthly pensions. Eight (8) European Countries - Denmark, Luxembourg,
France, Belgium, Finland, the Netherlands, and Sweden — including Israel and Chile,
have similar schemes of automatic adjustments of age-old pensions.

The bill will greatly help the retirees make their hard-earned pensions cope
with the increasing cost of living for the remaining years of their life. About 280,000
GSIS pensioners, as well as many more in the future, together with their families,
stand to benefit from the enactment of this bill. With the total amount of GSIS
pensions estimated at about P 50 Billion for the year 2017, the incremental amount
needed to cover the adjustments under this bill is initially about P 2 Billion a year.
Funds to cover the adjustments of the retirement pensions will be derived from the
GSIS, given its robust financial standing.

In view of the foregoing, the passage of the bill is earnestly sought.

Senior Citizens Party List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGTEENTH CONGRESS

First Regular Session
5714

House Bill No.

Introduced by HON. FRANCISCO G. DATOL, JR.,
Representative, Senior Citizens Party-List

AN ACT
PROVIDING FOR THE AUTOMATIC ANNUAL ADJUSTMENT OF THE
PENSIONS OF RETIREES FROM THE GOVERNMENT WHO ARE MEMBERS OF
THE GOVERNMENT SERVICE INSURANCE SYSTEM

Be it enacted by the Senate and the House of Representatives of the Philippines
assembled:

SECTION 1. Coverage — This Act shall apply to all living retirees from the
National Government whose pensions are paid by the Government Service Insurance
‘System (GSIS) as of the effectivity date of this Act.

Section 2. Annual Adjustment of Pension - The monthly pension of a

retiree shall be automatically adjusted at every annual anniversary of this retirement
date by using the following formula:

MPn = MPo x K

K= CPIn/CPIo

Where:

MPn = new monthly pension of the retiree,

MPo = original monthly pension of the retiree at the time of this retirement,

K = adjustment factor to be applied to the original monthly pension,


CPIn = Consumer Price Index (CPI) issued by the Philippine Statistics
Authority (PSA) for the retirement anniversary month when the new monthly
pension will take effect, and

CPIo = Consumer Price Index (CPI) issued by the PSA for the month of the
year when the original monthly pension took effect.

SECTION 3. Source of Funds and Payments — The amounts needed to pay to
each concerned retiree the difference between the original and current monthly
Pensions, as a result of the application of the formulae in Section 2 hereof, shall be
provided from the funds of the GSIS. The GSIS shall pay the retiree the said
difference, as computed yearly, until the death of the retiree.

SECTION 4. Separability Clause — If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions hereof not affected thereby shall
continue to in full force and effect.

SECTION 5. Repealing Clause — All laws, decrees, rules and regulations or
Parts thereof inconsistent with this Act are hereby repealed or amended accordingly.

SECTION 6. Fffectivity— This Act shall take effect fifteen (15) days following
its publication in at least two (2) newspapers of general circulation.

Approved,