PET Plans builds up trust fund to P2.915B a year after rehab

PET Plans Inc.’s consolidated trust fund has grown to about P2.915 billion as of end-August this year from P2.83 billion at the time the cash-strapped pre-need firm sought a court-supervised corporate rehabilitation last year.

In a statement, PET Plans said its modified rehabilitation plan, which was approved by the Makati Regional Trial Court in April, will soon be implemented pending the selection of the universal bank that would manage its trust fund.

The revised rehab plan calls for the replacement of all pre-need contracts with shares in a unified trust fund called the Enhanced Value Plan (EVP). This is expected to result in higher profits for the company, thereby boosting PET Plans’ capacity to service the needs of its planholders.

PET officials said the modified rehabilitation plan is very feasible and will boost the viability of the pre-need business of the company. 

Unlike ordinary pre-need plans, the EVP has no set maturity dates and the planholder has the discretion to continue or withdraw from the EVP.

All earnings of the fund will be credited to the planholders without PET Plans taking part in the earnings. Additionally, 15 percent of PET Plans’ net income after tax will be contributed to the EVP fund.

Through its 18 years in business, PET Plans has sold a total of 77,440 educational plans, 32,185 memorial plans and 264,544 pension plans inclusive of terminated and fully serviced plans. At the time of its petition, about 125,000 plans remained active or in force.

Until the date of its conversion, PET Plans has paid benefits for all pre-need plans that have become due.

Based on financial projections submitted to the court, PET Plans expects its trust fund to more than double to P6.35 billion over the next 10 years.

The projection was based on the assumption of a conservative rate of return of eighth percent per annum for the trust fund portfolio. 

With the court ruling, planholders of plans that are fully paid and have matured may immediately avail of the EVP, or the amount in pesos that the EVP is worth, without any discount.

Planholders of pre-need plans that have not yet matured but who wish to avail of their EVP during the first three years from conversion are allowed to do so, but subject to a discount of 30 percent on the first year, 20 percent on the second year, and 10 percent on the third year after conversion.

On the other hand, planholders whose pre-need plans had lapsed before June 27, 2006 are given six months within which to reinstate their plans if allowed by the terms of the plan and if they comply with all requirements for reinstatement.

For plans that have lapsed on or after that date, the court-approved plan will not consider them as lapsed. But the pre-termination value of these plans shall be computed on the basis of the premiums paid as of the said date.