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Republic of the Philippines ‘S .
HOUSE OF REPRESENTATIVES, “IVED <
Quezon City [ss REGEIVED i
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SEVENTEENTH CONGRESS \\__"*
Second Regular Session :

House Bill No. 7495

Introduced by HON. FRANCISCO G. DATOL, JR.

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).

It is a 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 P 5,000.00 for those receiving a monthly pension of
less than P 5,000.00, 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 P 9,000.00, 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 P 18, 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 percentagesof 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.

a

FI 0 G. D) JR.
Representative
Senior Citizens Party-List


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Second Regular Session

House Bill No. 74935

Introduced by HON. FRANCISCO G. DATOL, JR.

AN ACT
PROVIDING FOR THE AUTOMATIC ANNUAL ADJUSTMENT OF
THE PENSIONS OF RETIRESS 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 in Congress 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 = MPoxK

K =CPIn/CPlo

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

CPlo = 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 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 - \f 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 ot
parts thereof inconsistent with this Act are hereby repealed or amended

accordingly.

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

Approved,