MANILA, Philippines — The Government Service Insurance System (GSIS) narrowed its net loss to P18.7 billion in 2021 under the new accounting standard which took into account the state-run pension fund’s current and future claims.
The GSIS’s latest unaudited consolidated statement of comprehensive income on Tuesday showed last year’s net loss was much smaller than the P102.2 billion posted in 2020.
To recall, the GSIS and other government social institutions such as the Social Security System (SSS) and the Philippine Health Insurance Corp. (PhilHealth) late last year adjusted their books to the Philippine financial reporting standards (PFRS) 4, upon the orders of Finance Secretary Carlos Dominguez III.
Dominguez had said PFRS 4 provided a “more accurate” financial situation of these social institutions as the accounting standard reflected claims, unlike their previous financial statements which did not take payouts into account. As such, the GSIS and the SSS swung to net losses in 2020 from net incomes posted in 2019.
In the case of the GSIS, it slashed its net loss last year as total income was increased and total expenses reduced compared to 2020 levels.
The GSIS’s total income – composed of service and business income, assistance and subsidy, investment gains, and other non-operating income – rose to P424.4 billion in 2021 from 2020’s P354.1 billion.
Expenses, on the other hand, declined to P294.6 billion last year from P303.4 billion in 2020. The reduction in non-cash expenses offset higher maintenance and other operating expenses (MOOE), personnel services, as well as financial expenses.
As such, the GSIS booked a P129.7-billion net income from operations in 2021, up from P50.6 billion in 2020.
However, the GSIS subtracted from its operations’ net income the P148.4-billion worth of changes in insurance contract reserves last year, resulting in the net loss amounting to P18.7 billion.
In 2020, insurance reserve changes were a bigger P152.8 billion, exceeding its net income from operations, hence the bigger net loss of P102.2 billion.
Despite the GSIS and the SSS reporting net losses in 2020 and 2021, Dominguez had assured pensioners and members that these pension funds remained in good shape. The GSIS’s funds, for instance, won’t be depleted until 2053.
“Booking and reporting the social benefit liabilities do not affect the institutions’ cash flow and funding situations,” Dominguez said last year.
The GSIS was currently procuring 10 additional local equity managers to ramp up its investments in the domestic market.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.
For feedback, complaints, or inquiries, contact us.