GSIS fund life extends to 2058

MANILA, Philippines — The Government Service Insurance System (GSIS) has extended its fund life by another five years, assuring state workers and pensioners of benefits until 2058 amid sustained investment returns.

In its first semester financial performance briefing yesterday, GSIS president and general manager Wick Veloso said GSIS has a fund life of 35 years or until 2058.

Based on the latest actuarial study, this is an increase of five years from the last assessment in 2021.

“A lengthier actuarial life allows us to meet our obligation of providing timely benefits to our members and pensioners,” Veloso said.

Actuarial projections are based on the expected cash flows of a pension fund in line with the international practice in social insurance. It covers future contributions based on the population as well as future benefits for members.

GSIS executive vice president Michael Praxedes said the pension fund’s current reserve stands at P2.074 trillion.

“This means that we can sustain our pensioners until 2058 based on the current rate,” Praxedes said.

Based on the pension fund’s benefit structure, state workers contribute nine percent of their gross salary, complemented by a 12-percent share by the government for a total of 21 percent, to the GSIS.

This is significantly below the private sector counterpart, through the Social Security System, which is only at a 14-percent combined contribution rate of employers and employees.

As to whether a contribution increase for government workers will be on the table to extend the fund life further, GSIS said the goal is not to hike. Currently, GSIS has two million members with 500,000 active pensioners.

“Our policy is to not increase because that will reduce the take home pay of workers,” Praxedes said.

“The aim is to deliver the benefits to our members at the current contribution rate. Whatever shortfall, we will get it through prudent investing,” he said.

As such, GSIS continues to invest in domestic key sectors with P1.2 trillion, up 12 percent, through government securities, loans, real estate, infrastructure, food, financial services, energy and mining.

Its foreign investment also increased by eight percent to P204 billion mainly on bonds and equities in a bid to diversify, access more opportunities abroad and optimize its portfolio returns.

It has also put P114 billion in investments in non-key sectors.

Meanwhile, GSIS saw its net income balloon to P61 billion during the first half from only P3 billion in the same period last year.

This, as revenues surged by 84 percent to P144 billion, driven by double-digit increases in gain on equities, interest income, and stock dividends on its investment portfolio.

The strong bottomline was also attributed to the 21-percent rise in premiums, as well as the almost 70-percent decline in claims, losses and benefits to P286 million.

In terms of expenses, GSIS recorded a 10-percent rise to P83 billion. The agency also improved its expense-to-revenue ratio to 58 percent from 62 percent last year.

“A key factor in keeping expenses under control has been the careful management of operational costs,” Veloso said.