Amending Commonwealth Act No. 186, As Amended, And Converting The Present Fixed Monthly Pensions Of The Government Service Insurance System To Indexed Monthly Pensions And For Other Purpose

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 712 April 1, 1975

AMENDING COMMONWEALTH ACT NO. 186, AS AMENDED, AND CONVERTING THE PRESENT FIXED MONTHLY PENSIONS OF THE GOVERNMENT SERVICE INSURANCE SYSTEM TO INDEXED MONTHLY PENSIONS AND FOR OTHER PURPOSES

WHEREAS, the fixed monthly annuities or pensions being received by government pensioners under Commonwealth Act No. 186, as amended, are hardly adequate to meet the increasing costs of living;

WHEREAS, the continuing erosion of the value of such fixed monthly annuities or pensions due to inflation or increase in the cost of living has aggravated the predicament of the retirees;

WHEREAS, the government is cognizant of the plight of government retirees and their families and is desirous of alleviating their predicament;

WHEREAS, a periodic adjustment of the fixed monthly pensions linked with the cost of living indices can protect the real value of the monthly annuities or pensions received by retirees from the erosive effects of inflation;

WHEREAS, the conversion of the fixed monthly annuities or pensions to indexed monthly pensions...

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Summary of Presidential Decree No. 712

Conversion of Fixed Monthly Pensions to Indexed Monthly Pensions (Section 1)
- The present fixed monthly pensions under Commonwealth Act No. 186 shall be converted to indexed monthly pensions.

Definitions (Section 2)
- Defines terms such as "fixed monthly pensions", "indexed monthly pensions", "cost of living index", "adjustment date", "average monthly index", "index ratio", "conversion factor", "adjustment factor", "board", "system", "future retirees", "present retirees", and "deferred period".

Adjustment of Pensions (Section 3)
- Future Retirees:
    - Without lump sum payment: Fixed monthly pensions converted to indexed monthly pensions on retirement date based on conversion factor. Subsequent adjustments on each adjustment date using adjustment factor. (Section 3(a)(1))
    - With lump sum payment: Lump sum computed on fixed monthly pensions. If surviving deferred period, additional lump sum paid and fixed monthly pensions converted to indexed monthly pensions. Subsequent adjustments using adjustment factor. (Section 3(a)(2))
- Present Retirees:
    - Receiving fixed monthly pensions: Converted to indexed monthly pensions on July 1, 1975 based on conversion factors for year of retirement. Subsequent adjustments using adjustment factor. (Section 3(b)(1))
    - Within deferred period: No adjustment on lump sum paid. At end of deferred period, fixed monthly pensions converted to indexed monthly pensions and adjusted using adjustment factor. (Section 3(b)(2))
    - No adjustment on fixed monthly pensions paid before July 1, 1975. (Section 3(b)(3))

Provisions (Section 4)
- Indexed monthly pensions shall not be less than present fixed monthly pensions.
- Other retirement options, benefits, and conditions under Commonwealth Act No. 186 shall not be abolished or impaired.

Funding (Section 5)
- Appropriation from National Treasury or transfer of government property to cover unfunded prior and current liabilities of Retirement Insurance Fund as of July 1, 1975, including initial conversion costs.
- Future liabilities funded as provided under Commonwealth Act No. 186 or by property transfer.

Implementing Rules and Regulations (Section 6)
- The System is empowered to promulgate rules and regulations to establish and implement indexed monthly pensions.

Facility of Payment (Section 7)
- The System is empowered to adopt rules to expedite payment of benefits, and payments made in good faith before adverse claim shall free the System from liability.

Reorganization (Section 8)
- The Board has power to reorganize the System, create or abolish positions, hire and separate personnel for efficient management.
- The Board can convert the position of General Manager to President and create other positions.

Exemptions (Sections 9-11)
- Indexed monthly pensions and other benefits are exempt from legal process except for debt to the System or criminal liability. (Section 9)
- The System is exempt from taxes, tariffs, duties, fees, and other charges. (Section 10)
- Benefits paid by the System are exempt from income tax and other taxes. (Section 11)

Valuation of Assets (Section 12)
- Assets recognized at acquisition cost and valued by independent appraisers to reflect fair market value when necessary.

Investment of Funds (Section 13)
- Funds managed by the System are not subject to restrictions under Commonwealth Act No. 186 or Insurance Code, and can be invested as determined by the Board.

Government and Outside Assistance (Sections 14-15)
- The System can call upon government agencies for material and personnel assistance. (Section 14)
- The System can engage services of competent consulting advisory firms when necessary. (Section 15)

Technical Notes (Section 16)
- Technical notes underlying conversion of fixed monthly pensions to indexed monthly pensions are annexed and made part of the Decree.
- Changes to technical notes require approval of the President.

Prior Laws (Section 17)
- Commonwealth Act No. 186 (GSIS Charter) is amended accordingly.
- Inconsistent laws, decrees, orders, and regulations are repealed, amended or modified.

Effective Date (Section 18)
- The Decree takes effect on April 1, 1975.