Flawed views on GSIS’ housing loans
Philippine Daily Inquirer
This pertains to the June 11 column of Honesto C. General (“Winston Garcia’s housekeeping chores”), particularly on the case of Nane Bacani, which Amado Cabaero of the Philippine Association of Retired Persons raised.
General said the move of the Government Service Insurance System (GSIS) reducing the interest rate on loans under its new housing program to 6.0 percent is “good news to the borrowers but terrible news to over a million members who will not borrow under the program.” He added that “in effect, members who will not borrow for low-cost housing will be subsidizing those who will.”
He also said the premiums paid by government employees and government agencies that are held in trust and invested by the GSIS would earn only 4.8 percent in net returns (when supposedly factoring in a 20 percent overhead expense of the GSIS) because of the low interest rate.
General’s views are flawed:
1. The very friendly rate of 6.0 percent has a negative effect on the net returns of our entire investment portfolio. Real property investment represents only eight percent of the entire GSIS investment portfolio and the GSIS can still achieve the 12 percent hurdle rate imposed by our actuary because of the compensatory effect of other higher-yielding investments like equities, long-term placements, etc.
2. Members who do not borrow under the low-cost housing program will not be subsidizing those who borrow. Investments should be viewed in their totality. The GSIS is a trustee of its members’ funds and not only of the real property portfolio.
3. The 4.8 percent net yield of the housing loan that General assumed is inaccurate. The GSIS’ overhead expense is much smaller than 20 percent; expense loading of the GSIS is considered not individually but in its totality; and some other fees (service fee) are additionally imposed to defray the cost of administering the loan.
4. General ignores the social relevance of our new housing loan program. Investment in real property has a great social impact because shelter is a basic need. The lowering of the interest rate is a sign of the GSIS’ unwavering commitment to the government’s drive to address the shortage in housing.
5. General also questioned whether or not Bacani is still entitled to a monthly pension after she received P26,694.91 in refund of retirement premiums as processed and paid by the GSIS office in Tacloban City. As stated in an earlier letter to Cabaero, Bacani is no longer eligible to receive annuity pension benefit under Republic Act 660 after she availed herself of the retirement benefit under RA 1616, otherwise known as “take-all” benefit. A government employee is entitled to only one retirement benefit under any of the GSIS retirement laws.
The law allows a “gratuitant” one year after his/her retirement within which to file for a conversion of the retirement option—from Republic Act 1616 to RA 660. In the case of Bacani, the one-year window had lapsed when she availed of the “take-all’ benefits of RA 1616 two years after her retirement.
ELLA E. VALENCERINA, vice president, Public Affairs, Government Service Insurance System, Financial Center, Pasay City
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