GSIS mulls broker-led pilot to revive member loans for stock investments

The Government Service Insurance System (GSIS) on Tuesday expressed openness to reviving member loans for stock market investments, but noted that this should be done through a phased pilot program with a broker-led model that would test investor suitability and risk controls.

Under its proposed framework, the GSIS said pilot testing would validate systems and measure how well members understand the program, as well as evaluate whether it can be rolled out on a larger scale before a broader rollout.

It also establishes loan limits based on salary, length of service, and existing retirement savings to prevent some 2.5 million members and pensioners from borrowing more than they can safely manage.

The proposal entails having brokers with proven track records and compliance with Securities and Exchange Commission (SEC) regulations assess suitability to determine whether the program is right for each member, evaluate their comfort level with risk, provide investment advice, and handle stock purchases and sales.

"Pension funds manage pooled investment and benefits administration. Brokers manage individual client accounts and capital market transactions," GSIS president and general manager Jose Arnulfo "Wick" Veloso said in an emailed statement.

"Accrediting qualified market professionals to conduct these functions allows the GSIS to focus on governance, oversight, and loan structuring while members receive expert guidance," he added.

This developed as the Philippine Stock Exchange (PSE) seeks to have state-run pension funds such as the GSIS and the Social Security System (SSS) to revive loan programs that will finance stock market investments of their members.

The PSE is looking to raise as much as P175 billion this year with four companies expected to make their initial public offering (IPO), but its president and chief executive officer Ramon Monzon said corruption concerns have to be addressed for the local market to grow.

"The PSE's call comes at a time when our markets need institutional support and our members deserve broader investment opportunities for their retirement," Veloso said.

"Our responsibility is to ensure that any program we implement protects retirement security while genuinely contributing to market health," he added.

The GSIS' proposed framework also links with the Personal Equity and Retirement Account (PERA) and other tax-advantaged retirement programs.

"We are not opposed to innovation. We are insisting on precision. A pilot allows us to build evidence, refine protections, and scale responsibly," Veloso said. — VDV, GMA Integrated News