Insurance firms buck removal of payroll deduction facility in 2002 national budget
October 29, 2001 | 12:00am
Insurance companies claim they will suffer heavy financial losses with the removal of payroll reduction facility in national budget.
The facility, which was in existence for 30 years, allows private insurers to utilize government infrastructure to collect premium through salary deductions much like the standard salary deductions of the Government Service and Insurance System (GSIS), or the Social Security System (SSS) in the case of the private sector.
According to the Payroll Deduction Insurance Association (PDIA), insurance companies collect an average P180 per month per teacher. Or with an estimated 400,000 teachers covered, that would be equivalent to P72 million per month premium collections.
PDIA president Rafael G. Uyguanco said that in the past five years, insurance companies have extended a total of P230 million claims to public school teachers.
"The average P180 per month deduction is a painless amortization which has been around for 30 years, and has benefited teachers and their families. This had enabled teachers to build up their savings and funds for the college education of their children, or for their retirement income," Uyguanco explained.
The deduction facility has also benefited the Department of Education Culture and Sports (DECS) through service fees it slaps per transaction or premium deduction amounting to P6.8 million per month.
"We believe that rendering the DECS deduction facility inaccessible is unfair not only to us, but also to thousands of teachers who would want to buy insurance through the deduction facility," the PDIA added.
The insurers added that the removal of the deduction facility runs counter to the Magna Carta of Public School Teachers or Republic Act 4670 which provides for the use of the DECS salary deduction facility for insurance companies.
To strengthen their argument, the insurers produced a Department of Justice (DOJ) opinion on a similar case that "section 36 of a proposed general appropriations bill cannot be constructed to repeal or amend, by implication or otherwise, the provision of an organic act such as Section 21 of the Magna Carta for Teachers."
Philippine American Life and General Insurance Co. (Philam Life) chief executive Jose L. Cuisia Jr., said that the continued operation of the facility would not affect teachers table-home pay.
Cuisia said deductions for insurance premiums represent a small portion of a teachers salary deductions while loans account for more than 50 percent of the regular deductions.
The facility, which was in existence for 30 years, allows private insurers to utilize government infrastructure to collect premium through salary deductions much like the standard salary deductions of the Government Service and Insurance System (GSIS), or the Social Security System (SSS) in the case of the private sector.
According to the Payroll Deduction Insurance Association (PDIA), insurance companies collect an average P180 per month per teacher. Or with an estimated 400,000 teachers covered, that would be equivalent to P72 million per month premium collections.
PDIA president Rafael G. Uyguanco said that in the past five years, insurance companies have extended a total of P230 million claims to public school teachers.
"The average P180 per month deduction is a painless amortization which has been around for 30 years, and has benefited teachers and their families. This had enabled teachers to build up their savings and funds for the college education of their children, or for their retirement income," Uyguanco explained.
The deduction facility has also benefited the Department of Education Culture and Sports (DECS) through service fees it slaps per transaction or premium deduction amounting to P6.8 million per month.
"We believe that rendering the DECS deduction facility inaccessible is unfair not only to us, but also to thousands of teachers who would want to buy insurance through the deduction facility," the PDIA added.
The insurers added that the removal of the deduction facility runs counter to the Magna Carta of Public School Teachers or Republic Act 4670 which provides for the use of the DECS salary deduction facility for insurance companies.
To strengthen their argument, the insurers produced a Department of Justice (DOJ) opinion on a similar case that "section 36 of a proposed general appropriations bill cannot be constructed to repeal or amend, by implication or otherwise, the provision of an organic act such as Section 21 of the Magna Carta for Teachers."
Philippine American Life and General Insurance Co. (Philam Life) chief executive Jose L. Cuisia Jr., said that the continued operation of the facility would not affect teachers table-home pay.
Cuisia said deductions for insurance premiums represent a small portion of a teachers salary deductions while loans account for more than 50 percent of the regular deductions.
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