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Republic of the Philippines - RECEIVED Z\
HOUSE OF REPRESENTATIVES S DATE November 8, 2022
Guezan Cis THE stam
NINETEENTH CONGRESS e BY Bei by
First Regular Session Ks. ry

Wo ner

HOUSE BILL NO. __5917_

Introduced by: REP. SALVADOR A. PLEYTO, SR. and REP. ROMEO S. MOMO

EXPLANATORY NOTE

Monthly retirement pensions of members 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 buy,
however, shrinks as the cost of living rises over the years. Consequently, the purchasing power
of the actual 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. 8291 (GSIS Charter). Such adjustments included those made
in 2010, amounting to 1.5% per year. In 2013, the minimum basic monthly pension was
increased to PhP 5,000. In 2019, the GSIS recommended to the President the approval of the
minimum basic pension at PhP 6,000 a month.

While these adjustments alleviate the plight of the pensioners, they are not regular and
predictable, being subject to the recommendation of the GSIS Board and approval of the
President.

Secondly, the rates of these adjustments lag far behind the actual rates of inflation, which
averaged 4 percent per year over the last 20 years,

‘Thirdly, the adjusted pensions are generally not enough to meet the rising cost of living. The
average monthly GSIS pension of retirees is PhP 12,560 (2018). This is only about 30% of the
PhP 42,000 per month that a family of five needs to survive or live above the poverty line,

according to the Secretary of the National Economic and Development Authority (2018),

Fourthly, the adjusted pensions of the retirees are much less than the monthly compensation of
active employees occupying comparable positions in the Government service. To illustrate, a
typical public school teacher who retired 15 years ago receives a monthly pension of less than
PhP 9,000, which is only about 35% of the PhP 25,439 minimum monthly salary of an
incumbent teacher.


Pension adjustment regulations in other countries are usually linked to price indices, The
Consumer Price Index (CPI) is the most frequently chosen basis for pension adjustment
internationally ~ among others, by Australia, New Zealand, Canada, the United States, Israel,
Korea, Brazil, Chile, Colombia and Mexico - albeit somewhat less by European countries, such
as Italy, France, Austria, and Belgium

This Bill, therefore, aims to provide for the annual automatic adjustment of the pensions of
retirees ftom 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). This will greatly help the retirees keep up with the rise in actual costs of their basic food
needs and non-food needs (such as maintenance medicine) for the remaining years of their life.

About 373,000 GSIS old-age pensioners (as of 2020), 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 PhP 38.1 billion in 2023, the incremental amount
needed to cover the adjustments under this Bill is about PhP 10.4 billion in 2024. Funds to cover
the adjustments of the retirement pensions are proposed to be sourced from the GSIS, given its
robust financial standing, as indicated by its Net Profit of PhP 31 billion in 2021

In view of the aforementioned facts, the immediate passage of this bill is earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 5917.

——_—

Introduced by: REP. SALVADOR A. PLEYTO, SR. and REP. ROMEO S. MOMO

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 in Congress
assembled:

Section 1. Coverage. - This Act shall apply to all living retirees from the Government
whose pensions are paid by the Government Service Insurance System (GSIS) as of the
effectivity date of this Act. It shall also apply to all future retirees from the Government whose
pensions are to be paid by the GSIS.

Section 2. Annual Adjustment of Pension. - The monthly pension of a retiree shall be
automatically adjusted at every annual anniversary of his retirement date by using the following
formulae:

MPn =MPoxK
K — =CPIN/CPIo
where:

MPn = new monthly pension of the retiree,

MPo = original monthly pension of the retiree at the time of his 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

CrIo — CFI 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, that is, the difference between the original and current monthly pensions, as a result of
the application of the formulae in Section 2 of this Act, shall be provided from funds of the
GSIS.


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

Section 5. Repealing Clause. - All laws, decrees, orders, rules and regulations or 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.