Social benefit liabilities of government social institutions (GSIs) like the Social Security System (SSS), the Government Service Insurance System (GSIS), and the Philippine Health Insurance Corporation (PhilHealth) have ballooned to PHP9.935 trillion in 2020 from PHP153.59 billion in 2019.
This as the GSIs fully complied with the Philippine Financial Reporting Standards (PFRS) 4, said Department of Finance Secretary Carlos Dominguez III in a briefing Friday.
Dominguez said the PFRS 4 is the current and interim accounting standard imposed on insurance entities in the country.
“(W)hen an insurance entity receives money from its members and enters in a contract to provide their members monetary obligations when certain events occurred, it has to set aside a reserve to cover that liability,” Dominguez said.
He added that private insurance institutions have been complying with this accounting system since 2005.
On the contrary, SSS, GSIS, and PhilHealth have been understating their liabilities as they have not been properly reporting their liabilities in their financial statements for 15 years, Dominguez added.
He added that full compliance to the PFRS 4 sets an accurate picture of the social institutions’ financial position.
Using PFRS 4, estimated social benefit liabilities of SSS jumped from PHP12.9 billion in 2019 to PHP6.8 trillion in 2020; from PHP29.35 billion to PHP2.04 trillion for GSIS; and from PHP111.34 billion to PHP1.13 trillion for PhilHealth.
“(P)olicymakers will be able to make informed decisions and legislate reforms based on an accurate appreciation of the funding situation of the institutions,” Dominguez added.
In the case of SSS which has a contribution increase set over the next few years, the new accounting system would tell not to defer any increases as “it will actually hurt the ability of the institutions in the future to meet their obligations”.
On the other hand, the DOF chief said there is no need for the public to be alarmed with the jump in liabilities of GSIs as their financial positions remain sound and they can meet their obligations such as disbursement of pensions.
Source: Philippines News Agency