Lowering gov’t retirement age to deplete GSIS fund

Old GSIS Building in Ermita (File Photo By Judgefloro/Wikimedia commons, CC BY-SA 4.0)

MANILA — Lowering the retirement age of government workers from 60 to 56 would deplete the state-owned pension fund 12 years earlier, top officials of Government Service Insurance System (GSIS) said Tuesday.

“The effect on the GSIS fund would be that the actuarial or the fund life will be reduced from 2051 as expected now to 2039, or 12 years,” said Isagani Cruz Jr., chief legal counsel of the Legal Services Group, in a media briefing.

To mitigate the effects of a reduction in retirement age, Cruz said the GSIS needs to infuse about PHP176.36 billion into the pension fund by increasing the monthly contribution of its members and cutting back on their benefits.

“I think both alternatives will not be really welcome,” he added. “In the absence of these alternatives, we just have to bite the bullet and face the reduction of fund life and expect the fund to deplete 12 years earlier.”

GSIS president and general manager Jesus Clint Aranas said old pensioners should not be made to suffer the impact of the exhaustion of fund.

“It is very important that the government employee or officer 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 said.

“The only viable option we are seeing to reconcile the intent of legislatures vis-a-vis our fund life and the healthiness of our fund is really to do this prospectively –for the new members, for new entrants,” he added.

The House of Representatives has approved on third and final reading House Bill No. 8683 lowering the optional retirement age of government employees from 60 to 56.