Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 712)
The main purpose of Presidential Decree No. 712 is to amend Commonwealth Act No. 186 by converting the fixed monthly pensions of the Government Service Insurance System (GSIS) retirees into indexed monthly pensions that adjust with the cost of living, thereby protecting the real value of the pensions against inflation.
'Indexed Monthly Pensions' refer to the adjusted and adjustable monthly annuities based on a cost of living index or other government indices, provided under this decree as a conversion from the fixed monthly pensions.
The 'Cost of Living Index' or 'Index' means the Consumer Price Index for the Philippines, as compiled by the Central Bank of the Philippines.
'Future Retirees' are present and future members of the Retirement Insurance Fund of the GSIS whose retirement dates are on or after July 1, 1975. 'Present Retirees' are members who have retired or retired prior to July 1, 1975.
For future retirees who do not elect the lump sum payment, their fixed monthly pensions are converted to indexed monthly pensions on their actual retirement date using the applicable conversion factor for their year of retirement. Subsequent yearly adjustments are made on the Adjustment Date multiplying by the Adjustment Factor.
Future retirees may elect a lump sum payment computed on the basis of the fixed monthly pensions. If they survive the Deferred Period, they are entitled to an additional lump sum equal to the difference of indexed pensions payable during that period and the lump sum received, then their fixed pensions convert to indexed pensions with yearly adjustments thereafter.
The indexed monthly pensions shall never be less than the present fixed monthly pensions and shall not abolish or impair other retirement benefits such as lump sum payments, survivors' and disability benefits as provided under the original law.
Funds to cover unfunded prior and current liabilities of the Retirement Insurance Fund as of July 1, 1975, including initial conversion costs, are appropriated from any available National Treasury funds or through transfer/conveyance of patrimonial property to the GSIS, subject to the President’s approval.
Indexed monthly pensions and other benefit payments by the GSIS are exempt from attachment, garnishment, levy, or seizure by legal or equitable process, except to pay debts to the GSIS or liabilities from criminal actions.
No, all benefits paid under this decree and other laws administered by the GSIS are exempt from income tax and all other forms of taxes.
The Board has broad powers to reorganize the GSIS, to promulgate implementing rules and regulations, to manage investments without prior restrictions, to create or abolish positions, and to ensure the efficient and economical management of the system.
This decree took effect on April 1, 1975.