Playing with state workers’ money

Members of the state fund Government Service Insurance System (GSIS) such as public teachers are being deprived of compassionate loan terms expected from a state institution in exchange for highly speculative investments.

Such a conflict in purpose has sparked calls for a congressional probe of the agency.

A resolution was filed in the House of Representatives to inquire into the GSIS’s propensity to gamble with the contributions of its members such as the P2.308-billion invested in companies that have not been profitable the past three years.

House Resolution 1705 was spurred by the P183.6 million in stock market losses due to the risky investments in just three companies.

Proponents of the resolution said transparency in the GSIS should be ensured and the pension funds protected from inefficient and corrupt practices.

The Commission on Audit (CoA) revealed in a 2023 report that the GSIS invested P2.308 billion in stocks over the past three years, yet the fund gained nothing from the investment.

The GSIS invested a total of P2.308 billion in Alternergy Holdings Corporation, SP New Energy Corp. and Bank of Commerce which, except for the latter, had no record of profitability over the last three years and no history of paying dividends at least once during the period.

The GSIS’s largest investment was in Alternergy, where it put in P85 million on 13 March 2023 and P1.450 billion more on 15 December later that year.

Another P472.92 million was invested on SP New Energy Corp. shares on 22 March 2022 and P300 million on Bank of Commerce stocks on 16 March 2022.

Except for the Bank of Commerce, the other companies did not have a record of profitability over the past three years and had not paid dividends to their stockholders which are requirements for the state fund’s investments.

The probe is in conjunction with complaints of GSIS members of too strict terms on borrowings against their contributions.

The members complain of unjust interest rates and penalties imposed on their loans, unreasonably reducing their retirement benefits.

Lawmakers called the terms GSIS imposed on loans to its members usurious. At times, members were charged for loans they had no knowledge of.

The House Committees on Government Enterprises and Privatization, and on Civil Service Professional Regulations were tasked to investigate GSIS’s loan policies.

The resolution cited the case of a retired public school teacher who said she was charged for an Emergency Loan Assistance and Summer One-Month Salary Loan that she was not aware of.

According to the resolution, the retired mentor received a letter from the GSIS informing her that her debts were paid out of deductions from her retirement benefits and the cash surrender value of her pension.

Another teacher was denied P638,172.59 of her retirement benefits which was mostly interest and penalties on P147,678.83 in loans she failed to settle.

It was found that the “exponential effect of the compounded interest on arrears added each month on top of the compounded penalty added each month” caused the petitioner’s loan obligations to balloon to over half a million pesos.

There was “interest on interest on interest” added to the petitioner’s balance every month and “the government can’t turn a blind eye to this patent unfairness,” the resolution said.

The usurious interest and penalties imposed by GSIS on members’ loans eating up most, if not all, of their retirement benefits is a common issue confronting many public school teachers and other government employees, the resolution further said.

The GSIS also does not notify its members about their delinquencies or about the interest and penalties they are being charged.

Under its current leadership, GSIS operates like a ruthless investment agency with a high-risk, high-reward approach, akin to gambling.