QuestionsQuestions (Republic Act No. 12)
To amend the GSIS Charter and convert fixed monthly pensions into indexed monthly pensions, with periodic adjustments linked to inflation/cost-of-living indices, so that retirees’ pensions better keep up with rising costs of living.
Fixed Monthly Pensions are level flat annuities under Section 11 of the GSIS Charter, while Indexed Monthly Pensions are adjusted and adjustable annuities under PD 712 based on a cost of living index or other government indices.
It is the Consumer Price Index for the Philippines, compiled by the Central Bank of the Philippines.
The first day of July in each calendar year.
Average Monthly Index is the sum of the monthly indices in a 12-month period ending December 31, divided by 12. Index Ratio is the sum of the monthly indices in a 60-month period ending December 31 preceding the Adjustment Date, divided by 60.
Their Fixed Monthly Pensions are multiplied by the applicable Conversion Factor based on the year of conversion and year of retirement; the resulting amount stays constant until the next Adjustment Date. Subsequent adjustments are made by multiplying the prior Indexed Monthly Pensions by the Adjustment Factor for each Adjustment Date.
They receive a lump sum computed on Fixed Monthly Pensions. If they survive the Deferred Period, they are entitled to an additional lump sum equal to the difference between the total Indexed Monthly Pensions payable during the Deferred Period and the lump sum actually received; then their Fixed Monthly Pensions are converted to Indexed Monthly Pensions thereafter, with subsequent yearly adjustments.
Effective as of July 1, 1975.
Section 4 provides that Indexed Monthly Pensions determined under Section 3 shall in no case be less than the present Fixed Monthly Pensions.
PD 712 lists Conversion Factors (e.g., 1959 and Prior: 1.75; 1973: 1.00; 1974: 1.00). The converted Indexed Monthly Pension equals Fixed Monthly Pension multiplied by the Conversion Factor corresponding to the year of retirement.
No adjustment is made on the lump sum value of Fixed Monthly Pensions paid in advance prior to July 1, 1975; when the Deferred Period ends, if the retiree is then alive, Fixed Monthly Pensions are converted to Indexed Monthly Pensions, and subsequent adjustments follow the rules for Future Retirees’ indexed adjustments.
For Present Retirees within the Deferred Period, PD 712 states that at the end of the Deferred Period, conversion occurs if alive; it also provides under Future Retirees that no additional payment is made if the retiree dies within the Deferred Period. The overall scheme is that indexed conversion/additional payments depend on survival to the Deferred Period’s end.
Adjustments are to be made by the System upon recommendation of the General Manager and approved by the President, in accordance with guidelines that may be issued as circumstances warrant (until amended/modified, the enumerated guidelines apply).
Indexed Monthly Pensions and other benefit payments are not subject to attachment, garnishment, levy, or seizure under any legal or equitable process, except to pay a debt of the retiree to the System or liability arising from a criminal action.
Yes. Section 11 provides that all benefits paid under PD 712 and other laws administered by the System are not subject to income tax and all other forms of taxes.
Section 10 exempts the System from payment of all forms of taxes, tariffs and duties, fees, imposts, and assessments, and other charges.
It appropriates sums from any fund in the National Treasury for unfunded prior and current liabilities of the Retirement Insurance Fund as of July 1, 1975, including sums needed for initial conversion. In lieu of appropriation, patrimonial government property may be transferred/conveyed to the System in fee simple, but first approved by the President.
The Board has full authority to reorganize the System by creating, merging, consolidating, or abolishing operating units and positions; to hire, appoint, promote, or separate personnel; and to perform acts for efficient and economical management. It also includes authority to convert General Manager into President of the System and create executive positions.
It took effect on April 1, 1975.