Philippines pension fund probe

Filipinos abroad, labor leaders and even the newly minted president of the Philippines are asking the Southeast Asian nation’s state pension fund to show them the money invested abroad, including in Canada.
The Trade Union Congress of the Philippines (TUCP) said members of the pension fund administered by the Government Service Insurance System (GSIS) have the right to information concerning the pension fund’s $565-million Global Investment Program (GIP).
The Government Service Insurance System of the Republic of the Philippines, is mandated to provide and administer social security benefits for government employees compulsory including life insurance,  retirement benefits, disability benefits for work-related contingencies and death benefits.
It has 1.5 million members.
President Benigno Aquino III said last week he found unacceptable, explanations that GSIS failed to service its members because of computer glitches.
“Over the last two years, the global financial markets have been highly turbulent. We reckon the GIP has been shaken by the turmoil,” TUCP secretary general and former Sen. Ernesto Herrera told local media.
Herrera noted that even President Aquino earlier said in all the areas where he campaigned, retired government employees, mostly former public school teachers, kept asking him where their GSIS pensions went.
“When retirees don’t get their pension on time, they don’t care about the excuses for the delay. They will simply suspect that their pensions have been stolen one way or the other. Or that GSIS does not have the money, and is simply stalling payments,” Herrera pointed out.
According to Herrera, the new GSIS chief must find out and then reveal to the public the management fees being paid by GSIS to Credit Agricole Asset Management Ltd. and ING Investment Management for overseeing the GIP.
The GSIS launched is Global Investment Program in April 2008. GSIS then declared P10.456 billion worth of investments in “global fixed income” instruments, P4.127 billion in “global equities,” P3.08 billion in “global property securities” and P8.875 billion in “cash, short-term notes and other investments.”
Herrera said GSIS did not provide the exact stakes it had in every type of instrument, despite TUCP’s plea to post the details on the pension fund’s website, to include the exact amounts invested in every bond, note, common stock and currency swap, at cost.
The calls for transparency come in the wake of President Aquino’s appointment of Daniel “Bitay” Lacson, a banker and former Negros Occidental as chairman of the state pension fund.
Aquino told reporters that he has directed Lacson to address the concerns of GSIS clients who have difficulty getting their pension.
Lacson served as governor during the presidency of  Aquino’s mother, Corazon Aquino, in 1986-1992. He will replace GSIS president and general manager Winston Garcia, who is accused of involvement in irregularities in the state pension fund agency.
Lacson campaigned actively for Aquino and running mate Manuel Roxas II for the May 10 election.
In Bacolod City, Lacson told Philippine media: “We will try to do our best to deliver what is expected of us not only by the President but also by the stakeholders of GSIS,” he said.
But Ferdinand Gaite, national president of the Confederation for Unity, Recognition and Advancement of Government Employees (Courage) said the appointment of Lacson would lead to more uncertainties for the 1.5 million members of the GSIS, and not the change that Mr. Aquino had promised.
“They are up against their pension fund being run by politicians, based on past experiences where it was siphoned to bankroll election campaigns,” Gaite said a statement.
“The appointment smacks of political patronage and the GSIS chairmanship are a hefty payback. We’re hoping the interest of the state workers is the primordial concern, and not politics,” he said.
“But beyond replacing Garcia, we are urging President Aquino to prosecute him and make him account for his abuses and fund mismanagement,” Gaite said.
Garcia stands accused of mismanaging GSIS, but has managed to head off the clamor for his ouster throughout the Arroyo administration.
At one point, he was accused by the GSIS employees’ union of using their mandatory contributions for his “personal quirks,” and misusing the pension fund for “extravagant investments,” including paintings.
He has denied all these.
Garcia was personally chosen by then President Gloria Macapagal-Arroyo to head GSIS. His family delivered crucial votes in the controversial presidential election in 2004 according to the Philippine Inquirer.