COA says P260M in GSIS employees’ incentives constitutes ‘illegal expenditure’

The Government Service Insurance System (GSIS) granted 97% of its employees P260 million in incentives, equivalent to P100,000 each, a Commission on Audit (COA) report showed.

But the amount was released without prior recommendation of the Department of Budget and Management and approval of the Office of the President, which violates Presidential Decree No. 1597, Republic Act No. 6758, and Joint Resolution (JR) No. 4, s. 2009, the commission said.

As such, it constituted “illegal expenditure” on the part of the pension fund for government employees, according to COA: “… the grant of Pagkilala Incentive, without the prior recommendation and approval of the DBM and Office of the President, respectively, resulted in illegal expenditure which is not allowed in audit.”

The commission released the 2018 report by uploading it on its website Thursday.

The incentives, according to the report, were released in line with the GSIS Galing ng Pagkilala Incentive under the Program on Awards and Incentives for Service Excellence (PRAISE). PRAISE is in turn the 2001 Civil Service Commission (CSC) Memorandum Circular (MC) No. 1.

The GSIS incentive program recognizes qualified executives and employees for their collective effort in contributing to GSIS’ achievement of awards and recognition of distinction from reputable local and international award-giving bodies.

In granting the incentives, the GSIS invoked the Frontline Service Champ Award and Seal of Excellence Hall of Famer it received from the CSC during the 101st anniversary celebration of the Anti-Red Tape Act in 2018.

“The grant of the aforesaid incentive, which is of significant amount, albeit pursuant to the CSC approved PRAISE, constitutes a new incentive to the GSIS employees which requires approval by the President, upon recommendation of the DBM as required under Sections 5 and 6 of PD No. 1597 and Section 9 of JR No. 4 s. 2009 as the said incentive is not among the allowable incentives under Section 12 of RA No. 6758,” the COA report read.

The GSIS Galing ng Pagkilala Incentive may be given in the cash or in kind.

A monetary incentive is subject to availability of savings for the performance year, provided that the total amount and other monetary awards under the program do not exceed 20 percent of the savings generated by the pension fund.

Sought for comment, GSIS president Clint Aranas said the GSIS’ Galing ng Pagkilala program was approved by the CSC and aimed giving incentives to "exemplary performance of government employees which is a best practice."

"The P260 million that GSIS granted its employees in 2018 constitutes just 18% of the P1.47Billion savings GSIS generated in 2018 and just 0.41% of the P64.95 billion in net income the System generated in 2018," Aranas said.

"More importantly, it does not affect the fund life," he added.

Aranas said that he and the members of the board of trustees were excluded from the incentive program.  —VDS/NB, GMA News