New accounting rules have pushed GSIS into the red for 2020

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The new accounting standard, which reflects current and future claims, pushed another state financial institution into the red, at least nominally, with the Government Services Insurance System (GSIS) dropping to a net loss of 101, 7 billion pesos in 2020 according to the revised calculation. rules.

The state-run pension fund for officials’ latest audited financial statements on Friday showed a reversal from the adjusted net income of 17.5 billion pesos posted in 2019.

As a reminder, Finance Secretary Carlos Dominguez III had ordered the GSIS, the Social Security System (SSS) and the Philippine Health Insurance Corp. precise financial situation of government social institutions.

Before using the PFRS 4, the unaudited financial statements of GSIS in February showed net income of 62.8 billion pesos in 2020, two-fifths less than its gain of 104.9 billion pesos in 2019, mainly due to an increase in the number of people induced by the pandemic. expenses.

At the height of last year’s toughest COVID-19 lockdowns, GSIS offered various loan programs while unlocking benefits on time given tougher times caused by the pandemic

It has also assumed insurance benefits for families of primary care physicians in public health facilities who have died in the fight against COVID-19.

Under PFRS 4, the negative net result of GSIS in 2020 was due to the changes of 152.8 billion pesos in reserves of insurance contracts deducted from profits of GSIS. These reflected payments to retirees and members, which increased from 112.2 billion pesos in 2019.

The net profits of GSIS in 2020 were also deducted from 97.9 million pesos in financial aid, grants and net contributions, which increased from 88.6 million pesos in 2019.

Its audited statements of comprehensive income showed that GSIS revenue declined to 351.1 billion pesos in 2020 from 361.8 billion pesos retirees in 2019, while spending climbed to 299.9 billion pesos. last year against 232.1 billion pesos in 2019.

GSIS’s 2020 overall loss was larger by 108.2 billion pesos, as it included changes in the fair value of investments, revaluation of insurance contract reserves and revaluation surplus, among other losses.

Dominguez had said that the insured public did not need to worry despite larger liabilities and net losses expected by GSIS, SSS and PhilHealth, because “the recognition and reporting of social benefit liability does not affect not the cash flows and funding positions of institutions “.

The Chief Financial Officer had assured that the benefits to members and retirees of these three government social institutions would not stop. Currently, GSIS funds will not be depleted until 2053.

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