New trust fund increase to protect planholders

MANILA, Philippines - Starting next week, pre-need companies will be required to increase their trust fund allotments after the government moved to strengthen planholder protection. Pre-need firms need to deposit 70 percent, from the previous five percent, of an education and pension planholder’s first year payment to the trust fund, the Securities and Exchange Commission said on Thursday. Trust funds, used to cover payments to planholders, are deposited in pre-need firms’ trustee banks. As a result, 70 centavos will be allotted to the trust fund for every peso paid by planholders during the first year, SEC Commissioner Thaddeus Venturanza said during the hearing of the Senate committee on trade and commerce. Similarly, preneed companies will be required to deposit 60 centavos – from the previous 51 centavos – for every peso paid by planholders for the total amount of their education and pension plans. For life plans, companies should now give 50 centavos for every peso of the total payment, instead of the previous 45 centavos, to the trust fund. In the plan’s first year, companies should now deposit, from the previous five percent, 30 percent of the payment to the trust fund. The decision to implement these new rules were made on Thursday during an en banc meeting, Venturanza, oversight commissioner on non-traditional securities and instruments, told GMANews.TV. “The commissioners made the decision in an en banc meeting to amend the policies which we feel do not protect the plan holders," Venturanza said. “The bigger the amount deposited to the trust find, the bigger interest it will get," Venturanza added. Pre-need companies were also advised to “spread out over the years their payment to their agents instead of giving them half the amount of the plan right away." The new policies will be effective next week and will cover only newly-bought plans. During the Senate hearing, Venturanza also sought a stronger regulatory mandate for agencies such as the SEC, including the authority to file civil cases. This, he said, will give regulators “more teeth" in implementing their policies. Currently, the SEC is only limited to moving against violations of the Securities Regulation Code. Even the Office of the Solicitor General told SEC officials that they do not have the power to file civil cases when the SEC tried to seek approval to take over assets of companies that violated the SRC. Senator Manuel Roxas III, who heads the chamber’s trade and finance committee, welcomed the amendments to SEC rules and requested the agency to formally send their proposals to the Senate. - GMANews.TV