MANILA, Philippines — The Government Service Insurance System (GSIS) said a proposal to lower the retirement age of government employees to 56 from 60 would slash the actuarial life of the pension fund by 12 years.
Isagani Cruz, chief legal counsel of GSIS, said the life of the state-run fund would be reduced to 2039 from the current 2051 if the planned lowering of the optional retirement age for government workers is enacted into law.
“Additionally, in money terms, to sustain the fund life, we will need an additional reserve requirement of P176.36 billion,” Cruz said.
Apart from the infusion of money into the funds to mitigate the effects of the reduction in retirement age, Cruz said GSIS needs to raise the contribution rate of members or introduce a decrease in benefits.
“I think both alternatives will not be really welcome. In the absence of these alternatives, we’ll just have to bite the bullet and the face the reduction in the fund life, and expect the fund to deplete 12 years earlier,” Cruz said.
The House of Representatives this month approved on third and final reading House Bill 8683 authored by ACT Teachers party-list Rep. Antonio Tinio seeking to lower the optional retirement age of government workers through amendments to Republic Act 8291 or the Government Service Insurance Act of 1997.
GSIS president and general manager Jesus Clint Aranas said in a press conference the other option is to apply the proposal to new members and not to existing members.
“The only viable option we see to reconcile the intent of the legislature vis-a-vis our fund life, the healthiness of our fund life, is really to do this prospectively, for the new members, for the new entrants, they can have this package,” Aranas said.
The GSIS chief said the old pensioners should not be made to suffer the consequences.
“It will reduce the fund life of GSIS and it destroys and erodes job security. As I mentioned earlier, the pension of a government worker is his job security,” Aranas said.
GSIS has 1.787 million active members with an average age of 43 as well as an average salary of P25,387 per month.
The pension fund manager currently has an average retirement age of 61 years old with an average basic monthly pension of P12,586.93.