MANILA, Philippines ? With pre-need industry going into deeper trouble, the government should immediately impose a moratorium on sale of pre-need plans, a congressman said Tuesday.

After the recent closure of the Legacy group's pre-need firms ? Legacy Consolidated Plans Inc., Scholarship Plan Philippines Inc. and All Asia Plans Corp. ? which have some 50,000 plan-holders, there is need to determine if pre-need plans remain a "viable business" and a safe investment, Representative Carlos Padilla of Nueva Vizcaya province said.

Padilla called on the House committee on banks and financial intermediaries to go slow in approving creation of a Pre-Need Insurance Corp. as a means for protecting plan-holders through an insurance fund that would guarantee benefit payments in case a pre-need firm collapses.

At a House hearing Tuesday on pre-need companies, Representative Luis Villafuerte of Camarines Sur province said it was important to know how many of the pre-need companies were in financial trouble, as the proposed Pre-Need Insurance Corp. would absorb some if not all the claims if their plan-holders.

Villafuerte asked Juan Miguel Vazquez, president of the Philippine Federation of Pre-need Companies of the Philippines, to tell the committee if the pre-need industry was facing a problem in liquidity or solvency.

Vazquez replied, "The industry is anticipating a potential problem in solvency."

The value of the trust funds in which pre-need companies deposit their sales proceeds ? and which are the sources of payments for future obligations ? has fallen because of the global economic crisis, Vazquez said.

Their yields have gone down to six percent a year from the 12 percent assumed by most pre-need companies in making the deposits, he said.

Padilla noted that there was no global crisis when major pre-need companies like College Assurance Plan got into financial trouble in 2004, and so their present problems might be worse.

"I'm calling for a moratorium on the sale of pre-need plans because maybe the economic conditions do not warrant it," he said.

Vazquez said the industry federation was sounding off on the problem proactively, to prevent the collapse of the industry.

He said the federation was not seeking a bailout.