GSIS warns against proposed reduction in retirement age to 56
State-run Government Service Insurance System (GSIS) stands to lose 12 years from its fund life if the House-approved bill reducing the optional retirement age of government personnel to 56 becomes a law, officials of the pension fund warned yesterday.
If ever Congress would push through with the measure that would allow government workers to retire even earlier than the current early-retirement age of 60, GSIS president and general manager Jesus Clint O. Aranas said the pension fund was hoping it would be applied only to new entrants to public service.
“The only viable option is to do this prospectively—for the new members, for the new entrants, they can have this package. But the old pensioners should not be made to suffer
the challenges, because as studies would show, it will reduce the fund life of the GSIS,” Aranas said.
“It destroys and erodes job security—the pension of a government worker is his job security. It is very important that the government employee knows that he has a solid pension and a retirement when he does retire at the end of the day. That’s job security,” he added.
GSIS chief legal counsel Isagani L. Cruz Jr. said the proposed reduction in optional retirement age would shorten GSIS’ fund life by 12 years to 2039 from 2051 at present.
Article continues after this advertisementIt means that the GSIS could no longer have funds to disburse benefits by 2039, unless its fund is replenished.
Article continues after this advertisement“In money terms, to sustain the fund life, we will need an additional reserve requirement of P176.36 billion,” Cruz added.
Cruz said that besides capital infusion, the GSIS might have no other option but to either increase members’ contribution rate or slash benefits in order to mitigate the impact of the planned retirement age cut and sustain the fund life.
“I think both alternatives will not be really welcome. In the absence of these alternatives, we’ll just have to bite the bullet and face the reduction of the fund life, and expect the fund to be depleted 12 years earlier [than previously programmed],” Cruz warned.
