Lawmaker blames SEC for downfall of pre-need firms

Rep. Harlin Abayon has blamed the new rules being implemented by the Securities and Exchange Commission (SEC) to compute the actuarial reserve liability (ARL) for the downfall of several pre-need firms.

In a hearing of the House of Representatives Committee on Oversight last week, Abayon said: "The SEC came out with new regulations, among them the ARL which has caused major problems in the industry, including the non-renewal of the license of many companies. Before these circulars were implemented, pre-need companies were doing well, but because of the arbitrary implementation of these new rules, pre-need companies were affected."

The ARL is computed by deducting the present value of future trust fund contributions from present value of future benefits.

The hearing was in response to Abayon’s call for an inquiry into the financial problems now besetting pre-need firms like College Assurance Plans Phils. Inc. (CAP) and Pacific Plans Inc.

"We need to inquire whether there is a need to continue or hold in abeyance these rules and give transitory leeway to the affected companies," Abayon said.

Abayon noted that even the Philippine Federation of Pre-need Plan Companies sought a dialogue with the SEC on the ARL and circulars 6, 7 and 8 which allegedly had been implemented by the SEC arbitrarily.

The Federation, however, did not get any feedback from the SEC.

CAP first vice-president Bobby Café, for his part, said the pre-need firm’s problems could be traced to the application of the ARL. – Zinnia dela Peña