MANILA - The Senate Committee on Civil Service, Government Reorganization and Professional Regulation today held a public hearing tackling proposals to lower the compulsory and/or optional retirement age for government employees, as well as the automatic promotion of government officials and employees upon retirement.

The GSIS explained to the committee, however, that lowering the retirement age will reduce the amount of contributions since it will also shorten the contribution period of GSIS members.

If compounded with an automatic promotion upon retirement, which means a higher pension for the retiree, it will shorten the fund’s actuarial life.

According to GSIS, studies indicated that the fund’s current actuarial life of 26 years may be shortened by 5 to 11 years.

The GSIS also claimed its liabilities will increase by 40 percent or around P800 billion, which also means it will need other sources of funding. It admitted however that all its data needs updating.

“Certainly it will really have some effect considering that it will entail higher salary factor in determining the pension... The increase in premium contribution is really our last resort, we don't want to resort to increasing premium contribution for as long as kaya pa whatever proposal so we’ll do the numbers,” said Atty. Lucio Yu Jr., GSIS Assistant Chief Legal Counsel.

But Committee Chaiman, Senator Ramon "Bong" Revilla, meanwhile argued, not all qualified workers will necessarily retire right away.

“Yung 56 to 65 is about 17% correct? 17.59 percent. I think 'di naman lahat yan magsasabay-sabay na magreretiro siguro, optional retirement nga eh 'di ba. So option, hindi naman siya mandatory o magretire ka na, hindi naman eh. So kung gusto nila magtuloy, siguro ang papayag lang dito mga 30 to 40 percent or maybe less,” Revilla said.

Senator Sherwin Gatchalian also requested the GSIS to conduct simulations and present specific figures on financial impact according to various scenarios.

"There are so many scenarios. One is to raise the salary grade, the other one is to lower the optional age of retirement, the other one is to maintain the fund life, so all of these simulations should be run so we would be guided accordingly. So for example if you say you would need X amount of additional equity, then Congress will study whether that X amount is worth injecting to GSIS," Gatchalian said.

"Conceptually, everyone wants this… The next question is how much will it cost to approve this proposal and only GSIS can answer that," he added.

For Civil Service Commissioner Atty. Aileen Lizada, lowering the optional retirement age and a promotion upon retirement for deserving workers in government is like a pat on the back.

She emphasized that currently, pension is computed by averaging the worker’s salary for the last 3 years instead of basing it on the last pay. This means even a promotion before retirement will have a minimal impact on pension computation.

“It has long been our request to GSIS that the last salary pay be the basis of the pension, wag na pong mag-average. Because when you do averaging it goes down one phase, and then it will be subjected to another formula, leading to another step down whereas in the private sector, it is the last salary ang binibigay... of it can be the last salary masayang masaya na po ang 1.9 million government workers,” Lazada explained.

Lizada also pointed out that the Philippines has the oldest optional retirement age at 60 years old, while other countries have 40 to 55 years old. She also called out GSIS’ lack of data to support its position and reminded the government pension fund that it is simply entrusted to manage contributions from members which it should not treat as income.

The Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) meanwhile argued that automatic promotion upon retirement and the optional retirement age of 56 years old are already being enjoyed by uniformed personnel.

COURAGE President Santiago Dasmariñas further insisted that the same policy must be applied to all government workers.

A technical working group (TWG) is expected to be created soon in bbm order to thresh out details including the actual impact on GSIS funds.

It can be remembered that the House of Representatives has already approved on third and final reading last January, House Bill 206 that also proposes lowering the optional retirement age of civil servants, from 60 to 56 years old, for as long as he or she has rendered at least 15 years of service.

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