GSIS turned profitable again in 2021
The Government Service Insurance System (GSIS) returned to the black in 2021 with a net income of P595.8 billion, on the back of lower pricing of future liabilities as well as smaller expenses than revenues.
Audited financial statements of the state-run pension fund for government workers showed a reversal of the P94.2-billion restated net loss posted in 2020.
The GSIS grew its income last year to P424.1 billion from P363.8 billion in 2020. Service and business income mainly from members’ contributions, assistance and subsidy from the national government, investment gains, as well as other nonoperating income all increased in 2021 alongside economic recovery from the pandemic-induced slump.
Meanwhile, the GSIS’s expenses declined to P296.9 billion last year from 2020’s P303.4 billion. While expenditures on personnel services, maintenance and other operating expenses, and financial expenses for pensioners’ and members’ benefits rose in 2021, the GSIS reduced its noncash expenses.
Besides booking a profit of P127.2 billion or double the P60.4 billion in 2020, the GSIS booked a P468.7-billion gain coming from changes in insurance contract reserves, its statements of comprehensive income showed.
“As of end-2021 and end-2020, changes in insurance contract reserves amounted to P468.7 billion and negative P154.4 billion, respectively. The significant change in insurance contract reserves is due to the change in the discount rate used in computing the account from 9.64 percent to 7 percent in calendar years 2020 and 2021, respectively,” the GSIS explained.
Insurance contract reserves referred to contractual benefits which were expected to be incurred in the future for policies currently in force.
To recall, the GSIS and other government social institutions like the Social Security System (SSS) and the Philippine Health Insurance Corp. late last year adjusted their books to the Philippine financial reporting standards (PFRS) 4, upon the orders of former Finance Secretary Carlos Dominguez III.
Dominguez had said PFRS 4 provided a “more accurate” picture of the financial situation of these social institutions as the accounting standard reflected claims, unlike their previous financial statements which did not take payouts into account. As such, the GSIS and the SSS swung to a net loss in 2020 from profits posted in 2019.
Despite the GSIS and the SSS reporting net losses, Dominguez had assured members and pensioners that these pension funds remained in good shape.
The GSIS’s funds, for instance, won’t be depleted until 2053.
“Booking and reporting the social benefit liabilities do not affect the institutions’ cash flow and funding situations,” Dominguez noted last year.
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