SEC poised to approve CAP funding scheme

The Securities and Exchange Commission (SEC) is inclined to approve the Trust Fund Enhancement Program laid out by the College Assurance Plan (CAP).

SEC Chairman Lilia Bautista said that while she sees no problem in the approval of CAP’s proposal for a Trust Fund Enhancement Program, the Commission would require strict compliance from the pre-need company that it would live up to its commitments.

"Of paramount consideration is always the interest of the investing public – or the ability of the pre-need company to meet its obligations to its planholders when they become due," she said.

The country’s largest pre-need firm has reportedly incurred a P2.5-billion trust fund deficiency based on its latest annual valuation report. But CAP said it has approved an equivalent fund build-up program through the infusion of cash and SEC poised … from B-1

acceptable assets to cover this shortfall, allaying concerns by its planholders of not getting back what they have paid for.

CAP president Enrique Sobrepena had expressed confidence on their proposal and assured its numerous planholders that they will continue to service their obligations. "We have done and will continue to do everything to ensure that the interest of our planholders are protected. They have nothing to worry about."

He reiterated that CAP remains highly liquid since it has almost twice the amount required by the SEC of the liquidity requirements of at least 10 percent of the total trust fund.

"There are no catastrophes in the industry as maturity dates when a child enters college are pre-determined," Sobrepena stressed. CAP has graduated over 40,000 students and has paid more than P6.6 billion in trust funds.

A turst fund, which is like a bank’s mandatory reserve requirement to cover for emergency needs such as a sudden rush of withdrawals, is a percentage of the total fund pre-need companies pool from their planholders set aside to settle all the obligations in the event these simultaneously become payable.