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 there's 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 doesn't 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 employer's 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 "Don't ask, don't 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 can't 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 beneficiary's 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 can't evade and a funding obligation which their employer can't avoid.

Consider the following:

On top of the national government or employer's 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 doesn't 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 citizen's 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 country's 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 member's 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 shouldn't 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 Member's 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.

It's 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 doesn't 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 can't invoke poverty of either ideas or resources.

If Maynilad's and Manila Water's combined 2.57 Million customers, Metrobank's 3.14 Million depositors, Globe's 1.14 Million postpaid subscribers, Meralco's 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 member's old air-conditioner breaks down, he can dial the manufacturer's 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 shouldn't 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 aren't 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 fund's 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 doesn't 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 member's 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.