Amendments to GSIS Law on Coverage and Benefits

Legal basis, predecessor law amended

Presidential Decree No. 1981 is enacted to further amend Presidential Decree No. 1116 (the Revised Government Service Insurance Act of 1977).
Presidential Decree No. 1981 is framed as amendments to earlier GSIS law provisions, focusing on interpretations linked to Presidential Decree No. 1146, and retirement options tied to Commonwealth Act No. 186.
The decree addresses interpretive conflicts involving coverage duration for elective officials, forfeiture of retirement benefits upon separation for cause or resignation, and retirement option choices available at the time GSIS coverage rules took effect under Presidential Decree No. 1146.

Policy and purpose statements

Presidential Decree No. 1981 states that GSIS was established to guarantee the well-being of all government employees through effective and systematic administration of social security and insurance benefits.
Presidential Decree No. 1981 declares the need to clarify provisions of Presidential Decree No. 1146 to make them responsive to GSIS members’ needs and to assure the actuarial solvency of GSIS funds during a grave economic crisis.
Presidential Decree No. 1981 declares that the continued tax exemption of the GSIS is vital to actuarial solvency.
Presidential Decree No. 1981 vests the GSIS Board of Trustees with powers necessary to ensure a fair and profitable return of investments and to take full sole responsibility for controlling and monitoring insurance investment operations.

Coverage and member definitions

Sub-section (d) of Section 2 is amended to define an “Employee” as any person, whether elected or appointed, in the service of an employer who receives compensation for such service.
Section 3 provides compulsory coverage through GSIS membership for:
- all permanent employees below 60 years of age upon appointment to permanent status, and
- all elective officials, for the duration of their tenure.
Section 3 allows compulsory coverage to be extended to non-permanent employees of national government agencies and local governments only upon approval of the President of the Philippines and subject to the availability of funds, either simultaneously, in phases or by groups.
Section 3 allows non-permanent employees of government-owned and controlled corporations to be covered upon approval by the System at the request of their respective Governing Boards.
Section 3 provides that coverage of temporary employees under R.A. No. 4968 remains in force.

Effects of separation and retirement options

Section 4 provides that a member separated from the service continues to be a member and remains entitled to benefits that have accrued earned at the time of separation in the event of any contingency compensable under the Act.
Section 4 provides that separation for cause or a member being considered resigned results in automatic forfeiture of accrued benefits unless the terms of the resignation or separation provide otherwise.
Section 4 provides that even in forfeiture of benefits, the separated employee is still entitled to one-half of the cash surrender value of his life insurance.
Section 13 provides that employees in the government service upon the affectivity of this Act may, at retirement, choose to retire under this Act or under Commonwealth Act No. 186, as amended.
Section 13 provides that benefits and entitlements are determined under the law opted at the time of retirement.
Section 13 provides that if a member is re-employed, the member’s subsequent retirement is governed by this Act.
Section 13 provides that a member may change the mode of retirement within one year from the date of retirement in accordance with rules and regulations prescribed by the System.

Disputes, jurisdiction, hearing process

Section 24 provides that GSIS has original and exclusive jurisdiction to settle any dispute arising under this Act and any other laws administered by the System.
Section 24 provides that when claims conflict between benefits payable under this Act and Commonwealth Act No. 186, as amended, the claim is paid in accordance with this Act.
Section 24 authorizes the Board to designate a Board member or System official who is a lawyer as a hearing officer to:
- receive evidence,
- make findings of fact, and
- submit recommendations.
Section 24 requires the hearing officer to submit findings and recommendations within thirty working days from the time the parties have closed their respective evidence and filed their last pleading.
Section 24 requires the Board to decide the case within thirty days from receipt of the hearing officer’s findings and recommendations.
Section 24 requires cases heard directly by the Board to be decided within thirty working days from the time submissions for decision are made by the parties.

Tax exemptions and non-impairment rule

Section 33 is reiterated in full, and a new second paragraph is inserted to provide that the exemptions are not affected by subsequent laws to the contrary.
Section 6 clarifies that exemptions are not affected by subsequent laws such as the provisions of Presidential Decree No. 1931 and other similar laws, whether enacted or to be enacted.
Section 6 limits impairment of exemptions by providing that exemptions remain controlling unless this section is expressly and categorically repealed by law and a provision is enacted to substitute the declared policy of exemption from any and all taxes as an essential factor for the solvency of the fund.

GSIS Board powers; investment operations control

Section 7 adds powers and functions of the Board of Trustees, including authority to:
- formulate policies, guidelines, and programs to carry out purposes and objectives of the Act,
- promulgate necessary and proper rules and regulations for effective exercise of powers and discharge of duties,
- approve annual and supplemental budgets and authorize operating and capital expenditures and disbursements upon recommendation of the President and General Manager.
Section 7 authorizes the Board to approve the System’s organizational and administrative structure and staffing pattern upon recommendation of the President and General Manager.
Section 7 authorizes the Board to establish, fix, review, revise, and adjust compensation packages for GSIS officers and employees, including reasonable allowances, incentives, bonuses, privileges, and other benefits as necessary or proper.
Section 7 exempts the System from rules and requirements of the Office of the Budget and Management and the Office of the Compensation and Position Classification for purposes of compensation, incentives, and related benefits under the Board’s authority.
Section 7 authorizes the Board to fix and periodically review and adjust rates of interest and other terms and conditions for loans and credits extended to members or other persons, whether natural or juridical.
Section 7 empowers the Board, regardless of amount, and notwithstanding any law to the contrary, to compromise or release in whole or in part any claim or settled liability to the System under terms and conditions it imposes for the best interest of the System.
Section 7 grants the Board power “to do and perform any and all acts necessary, proper or incidental” to attain the purposes and objectives of the Act.
Section 8 adds a new sub-section (c) to Section 39, providing that insurance and investment operations of the System are under the System’s full and sole responsibility, notwithstanding Section 246 of the Insurance Code, as amended.

Repeals, modifications, separability, penalties, sanctions

Section 9 provides that any provision of laws, decrees, ordinances, executive or administrative orders, letters of instructions, rules and regulations inconsistent with the decree is repealed, amended, or modified accordingly.
The decree does not provide any specific penalties, fines, or sanctions for non-compliance within its operative sections.