Wanted: Better fund managers

The Government Service Insurance System (GSIS) is one of the better-managed government-owned and controlled corporations (GOCCs) in the country today. Proof of which is the fact that the GSIS is one of the principal players in our Philippine Stock Exchange with their foreign and local investment placements earning so much for the members of the state pension fund  manager.

The GSIS as of March this year has 1.8 million members, composed of national and local government workers and employees. The bulk of GSIS members are the more than 500,000 public school teachers all over the country.

Since 2012, the GSIS started making capital available for infrastructure development in the country with its commitment to invest as much as P16.7 billion worth of dollar and peso funds for the Philippine Investment Alliance for Infrastructure. The GSIS hired Macquarie Infrastructure and Real Assets as its global asset manager. These investments yielded returns of more than 13 percent as of last year.

This turnaround of the GSIS largely started with the financial genius of former GSIS president and general manager Robert Bernie Vergara. A former financial stock manager in Hong Kong, Vergara gave up his lucrative job when he accepted the appointment to the GSIS. It was an easy job already when Vergara took the helm of the GSIS after the initial reforms have already taken roots in the system.

The bitter reforms were undertaken by his immediate predecessor, Winston Garcia who ran the state pension fund during the nine years of former President Gloria Macapagal-Arroyo. Garcia was one of the original appointees of Mrs. Arroyo who lasted that long. The state pension fund is currently headed by Atty. Jesus Clint Aranas as president and general manager.

We had very lively discussions with Aranas on the state of finances of the GSIS during our Kapihan sa Manila Bay last Wednesday at Café Adriatico in Malate, Manila. It was my first time to meet the new GSIS chief who was appointed by President Rodrigo Duterte to his post on Nov. 7 last year.

Despite just meeting each other for the first time, my first impression of the gregarious personality of Aranas misled me into thinking he is a politician. But as it turned out, Aranas has never been into politics, nor has any plans to enter politics, Aranas swore to high heavens.

In my brief interview with him before our weekly news forum, Aranas told me his only connection to politics was when he privately volunteered to organize supporters in Western Visayas for then candidate ex-Davao City Mayor Duterte during the campaign for the May 2016 presidential elections. His support paid off and was rewarded with his posting as deputy commissioner at the Bureau of Internal Revenue (BIR) where he headed the Legal and Inspection Group.

President Duterte eventually tapped him to head the GSIS. After Vergara stepped down as a co-terminus official of the previous administration, the GSIS was headed by senior vice president Gigi Bocanegra as officer-in-charge. Aranas credited Bocanegra and the rest of the top management executives of the GSIS for keeping healthy the state pension funds for its members.

As a testament of its sound pension fund management, there are now proposals to establish a separate pension fund for uniformed police and military personnel to be managed also by the GSIS.

 It was Department of Budget and Management (DBM) Secretary Benjamin Diokno who broached this idea as a way to address the bill in the 17th Congress that seeks the indexation of retirement pensions of both the Armed Forces of the Philippines and the Philippine National Police (PNP).

“For efficiency and economy,” Diokno recommended to place the pension funds of both the AFP and the PNP under the management of the GSIS. The AFP has the moribund Retirement and Separation Benefits System (RSBS) handling the pension funds for the uniformed personnel of the military while the PNP has several pension funds managers for the policemen, the biggest of which is the Public Safety Mutual Benefit Fund Inc.

Speaking for the GSIS board, Aranas supports the proposal of the DBM Secretary subject to certain conditions and no comingling of the funds. Aranas expressed an open mind for the GSIS to manage the pension for incoming or new entrants who will remit their contributions to the GSIS. But everything is still under study, he added.

For now, the 50-year-old Aranas cited he re-started the Annual Pensioners’ Information Revalidation (APIR) program in a bid to cleanse the GSIS records and books. Aranas does not know why this annual revalidation of GSIS pensioners has been suspended since 2011. At the end of their APIR revalidation last June 30, it was discovered that as much as P1.6 billion have been lost to “ghost” pension claims, or payments made to GSIS members who were already dead but presumably their heirs or other people still collect illegally their monthly pension.

Pensions of GSIS pensioners who have failed to show their “proofs of life,” or that they are still alive after its deadline lapsed last June 30, have been suspended. Aranas, however, assured those who are still alive but failed to meet the APIR deadline not to worry because they will still receive the whole amount of their monthly pension that were withheld or suspended.

Once proof of life is complied with, the whole amount of pensions withheld will be given to them and they will resume getting their monthly retirement pay, the GSIS chief reassured state pensioners.

In fact, the actuarial life of the GSIS is good for 35 years without any additional members’ premium contributions, or bailout, nor budget support from government.

Aranas said the GSIS can even invest, if need be, to the Build, Build, Build infrastructure program of President Duterte.

Such robust financial health of the GSIS, however, could not be said about our own Social Security System (SSS) – the counterpart pension fund manager for us private sector workers and employees.  What say you, SSS?