Title
Conversion of Fixed to Indexed GSIS Pensions
Law
Presidential Decree No. 712
Decision Date
May 27, 1975
Presidential Decree No. 712 aims to address the issue of insufficient fixed monthly pensions for government pensioners by implementing periodic adjustments linked to the cost of living indices, converting fixed monthly pensions to indexed monthly pensions, and providing exemptions and powers to the Government Service Insurance System (GSIS) for effective administration.
amendments
insufficient fixed monthly pensions
government pensioners
A

Key Definitions

  • "Fixed Monthly Pensions": Flat monthly annuities under the original law.
  • "Indexed Monthly Pensions": Monthly annuities adjusted by cost of living indices.
  • "Cost of Living Index": Consumer Price Index as compiled by the Central Bank.
  • "Adjustment Date": July 1 of each year for pension adjustments.
  • "Average Monthly Index" and "Index Ratio": Calculated indices used for pension adjustments.
  • "Conversion Factor" and "Adjustment Factor": Variables used in converting and adjusting pensions.
  • "Board": Board of Trustees of the Government Service Insurance System (GSIS).
  • "System": The GSIS.
  • "Future Retirees": Members retiring on or after July 1, 1975.
  • "Present Retirees": Members retired prior to July 1, 1975.
  • "Deferred Period": Period where lump sum payments replace fixed monthly pensions for some retirees.

Procedures for Adjustment of Pensions

  • The System adjusts pensions annually upon recommendation of the GSIS General Manager and President approval.
  • Future Retirees who do not opt for lump sum: fixed pensions converted to indexed pensions at retirement; adjustments on each July 1.
  • Future Retirees who opt for lump sum: lump sum computed on fixed pension, possible additional lump sum after deferred period if survived.
  • Present Retirees: Pensions converted as of July 1, 1975, using prescribed conversion factors based on year of retirement.
  • Present Retirees within deferred period receive no lump sum adjustment but are converted to indexed pensions after deferred period if alive.

Protection and Preservation of Benefits

  • Indexed pensions must not be less than present fixed pensions.
  • Existing retirement options and benefits (e.g., lump sums, survivors, disability) remain unaltered and unimpaired.

Funding Measures

  • Appropriations from National Treasury, or transfers of patrimonial properties to GSIS, to cover unfunded liabilities as of July 1, 1975.
  • Future liabilities funded according to existing laws or property transfers.

Powers and Administrative Reforms

  • GSIS empowered to promulgate necessary rules for implementing indexed pensions.
  • GSIS authorized to reorganize, create or abolish units, and appoint personnel including upgrading General Manager to President.

Payment and Legal Protection

  • GSIS may expedite payments; payments made in good faith before adverse claims protect GSIS from liability.
  • Indexed pensions and benefits exempt from legal attachment except for government debts or criminal liabilities.

Tax Exemptions

  • GSIS and its funds exempt from taxes, fees, tariffs, and other charges.
  • Pension benefits are exempt from income and other taxes.

Asset Valuation and Investment

  • Assets recognized at acquisition cost; appraised or fair market valuation may be applied.
  • GSIS has broad authority to invest funds beyond limits of previous laws.

Government and Outside Assistance

  • GSIS can request material and personnel aid from government agencies.
  • GSIS may hire consulting and advisory firms as needed.

Technical Notes and Amendment of Prior Laws

  • Technical notes on pension conversion form part of the decree.
  • Changes in technical notes require Presidential approval.
  • Commonwealth Act No. 186 amended accordingly; inconsistent laws repealed or modified.

Effective Date

  • The decree took effect on April 1, 1975.

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