SUPERVISORY STRUCTURE FOR PRIVATE PENSION … · philippine securities & exchange commission...

PHILIPPINE SECURITIES & EXCHANGE COMMISSION

SUPERVISORY STRUCTURE SUPERVISORY STRUCTURE SUPERVISORY STRUCTURE SUPERVISORY STRUCTURE FOR PRIVATE PENSIONFOR PRIVATE PENSIONFOR PRIVATE PENSIONFOR PRIVATE PENSION

IN THE PHILIPPINES IN THE PHILIPPINES IN THE PHILIPPINES IN THE PHILIPPINES By Dir. Emilio B. Aquino

OECD/INPRS Conference on Private Pensions in Asia

May 28-30, Hyderabad, India


Outline of the PaperOutline of the PaperOutline of the PaperOutline of the Paper

• Introduction

• Functions and Responsibilities

• Independence

• Organizational Structure and Performance

• Conclusion


INTRODUCTIONINTRODUCTIONINTRODUCTIONINTRODUCTION


FourFourFourFour----Tiered SystemTiered SystemTiered SystemTiered System

Social assistance scheme (DOH, DSWD, PHIC)

Mandatory defined benefit scheme (GSIS, SSS)

Mandatory Retirement PayGSIS and Pag-ibig Fund

Voluntary tier (Pre-Need Pension Plans)


Private Pension SchemesPrivate Pension SchemesPrivate Pension SchemesPrivate Pension Schemes

• Mandatory Retirement Law (RA 7641)• Personal Pensions Plans:

– Pre-Need Pension Plans (RA 8799/ PN Rules)

– Endowment Insurance (PD 612)


Pension CompaniesPension CompaniesPension CompaniesPension CompaniesNumber, Size and ImpactNumber, Size and ImpactNumber, Size and ImpactNumber, Size and Impact

0

5

10

15

20

25

30

35

40

45

1996 1997 1998 1999 2000 2001

No. of Pre-NeedPension PlanCompanies

412001

412000

421999

361998

321997

391996

No. of Pre-Need Pension Plan Companies

Year


PrePrePrePre----Need SalesNeed SalesNeed SalesNeed SalesIndustry PerformanceIndustry PerformanceIndustry PerformanceIndustry Performance

1994 - 2001

0

10

20

30

40

50

1994 1995 1996 1997 1998 1999 2000 2001

year US$1=PhP52

in b

illion P

hP

esos


Pension Plan SalesPension Plan SalesPension Plan SalesPension Plan SalesIndustry PerformanceIndustry PerformanceIndustry PerformanceIndustry Performance

1994 - 2001

0

5

10

15

20

25

1994 1995 1996 1997 1998 1999 2000 2001

year

amo

un

t in

bill

ion

p

eso

s


Trust Fund EquitiesTrust Fund EquitiesTrust Fund EquitiesTrust Fund EquitiesNumber, Size and ImpactNumber, Size and ImpactNumber, Size and ImpactNumber, Size and Impact

0000

2,0002,0002,0002,000

4,0004,0004,0004,000

6,0006,0006,0006,000

8,0008,0008,0008,000

10,00010,00010,00010,000

12,00012,00012,00012,000

14,00014,00014,00014,000

1996199619961996 1998199819981998 2000200020002000

TrustFundEquities(inmillionpesos)

13,297.02001

10,600.02000

8,715.31999

6,753.01998

4,763.71997

3,613.51996

Amount (in million Pesos)

Year

Total Trust Fund Equities from 1996 to 2001


FUNCTIONS AND FUNCTIONS AND FUNCTIONS AND FUNCTIONS AND RESPONSIBILITIESRESPONSIBILITIESRESPONSIBILITIESRESPONSIBILITIES


Supervisory BodiesSupervisory BodiesSupervisory BodiesSupervisory Bodies

• Securities and Exchange Commission– Pre-Need Pension Plans

• Insurance Commission– Endowment/Annuity Plans


Functions and ResponsibilitiesFunctions and ResponsibilitiesFunctions and ResponsibilitiesFunctions and Responsibilities

SEC Contributions and Regularity of Payments

SECCompliance to Governance Rules

Pre-Need Plans enjoy no tax benefits. Under proposed PERA, the Bureau of Internal Revenue (BIR) will handle tax qualifications

Qualifications for Tax Benefits

SECLicensing/Registration



Trust Funds are lodged with Trust Entities

Custodian Procedures

Trust Entities follow a set of investment regulations (Monitored jointly by SEC and the Philippine Central Bank (BSP)

Investments, Asset Allocation, Performance, Min. Capital and Reserves

SEC approves the plan contract. Any issues arising therefrom are settled initially before a SEC mediation proceeding

Benefits Eligibility conditions

It is a voluntary pension scheme mostly subscribed by Overseas workers and the self-employed.

Membership



SEC Merger and Liquidation Process

SEC Rules provide for disclosure requirements

Disclosure Procedures

Basic Commission of 10% is allowed. Compliance is monitored by SEC

Administrative Cost, Fees and Marketing

SECFinancial, Actuarial and Accounting Methods


Coordination MechanismsCoordination MechanismsCoordination MechanismsCoordination Mechanisms

• MOAs between SEC and the Bangko Sentral NgPilipinas (BSP) on joint investigation and enforcement efforts.

• SEC, BSP and IC as the members of the Anti-Money Laundering Council.

• Current move to transfer supervision over the pre-need sector from SEC to the Insurance Commission.


Pros and Cons for a Specialized Pros and Cons for a Specialized Pros and Cons for a Specialized Pros and Cons for a Specialized AgencyAgencyAgencyAgency

• Advantages:– Regulatory Focus

• Developing Competencies• Coping up with fast changes within sphere of control

• Disadvantages:– Duplication of functions/Regulatory Arbitrage– Limited Jurisdiction.

• The Chairperson of the Philippine SEC has broached the idea of a single regulator to oversee the banking, insurance, pension and securities markets. The other agency heads are not receptive to the immediate consideration of the concept.


Political, Institutional Political, Institutional Political, Institutional Political, Institutional and Operational Independenceand Operational Independenceand Operational Independenceand Operational Independence


SEC TOP MANAGEMENTSEC TOP MANAGEMENTSEC TOP MANAGEMENTSEC TOP MANAGEMENT• The SEC is a collegial body, composed of a Chairperson and four (4)

Commissioners, appointed by the President for a term of seven (7) years each. (Sec. 4, Securities Regulation Code).

• Commissioners are natural-born citizens, 40 years of age for Chairperson and 35 years of age for Commissioners, of good moral character, of unquestionable integrity, of known probity and patriotism, and with recognized competence in social and economic disciplines.

• Majority of Commissioners, including the Chairperson, are members of the Philippine Bar.

• Chairperson, as CEO, executes and administers the policies, decisions, orders and resolutions approved by SEC and has general executivedirection and supervision of the work and operation of SEC.


Administrative Supervision Administrative Supervision Administrative Supervision Administrative Supervision and Financeand Financeand Financeand Finance

• The Department of Finance has administrative supervision over the SEC but not operational control.

• The Department of Budget and Management reviews the proposed budget and seeks the funding therefor from the Philippine Congress. SEC enjoys partial fiscal autonomy since it retains PhP100 million from its collections for operational needs. (Sec. 75, SRC)

• The pre-need industry is not involved with the determination of the cost of the supervision. However, the Federation of Pre-Need Companies has been into active advocacy including the call for Congress to grant the Insurance Commission the authority to retain a portion of its income similar to what the SEC enjoys.


Compensation of SEC StaffCompensation of SEC StaffCompensation of SEC StaffCompensation of SEC Staff• All SEC positions are governed by a compensation and position

classification systems and qualification standards approved by the Commission with a compensation plan comparable with that of the Bangko Sentral ng Pilipinas, subject to periodic review by the Commission no more than once every two (2) years without prejudice to yearly merit reviews or increases based on productivity and efficiency.

• SEC is exempt from laws, rules, and regulations on compensation, position classification and qualification standards.

• For now, the SEC salary scale more or less approximates that ofthe private sector.


Appointment and RemovalAppointment and RemovalAppointment and RemovalAppointment and Removal

• Directors like Commissioners are Presidential appointees. However, Directors and Assistant Directors must be holders of a Career Executive Service Eligibility and a Masters Degree .

• These career officials can only be removed for cause.• A minimum period of one year from departure from

SEC must be observed, before resigned employees may be hired by supervised entities. Although, this happens only occasionally.


Audit and ReviewAudit and ReviewAudit and ReviewAudit and Review• The Commission of Audit audits the activities of SEC.• While SEC exercises all supervisory powers, any person

aggrieved by an order of the Commission may appeal the order to the Court of Appeals by petition for review in accordance with the pertinent provisions of the Rules of Court. (Sec. 70, SRC)

• SEC comes out regularly with annual reports which are duly published. Weekly press conferences are conducted. Awebsite is maintained to post any significant information for the benefit of agency constituents.

• SEC appears to be armed with adequate powers to fulfill its mandate.


Organizational Structure Organizational Structure Organizational Structure Organizational Structure and Performanceand Performanceand Performanceand Performance


Vision and Mission StatementsVision and Mission StatementsVision and Mission StatementsVision and Mission StatementsVISION

It is the vision of the Securities and Exchange Commission, as an independent, credible regulator adhering to international standards, to be a prime mover of Philippine economic development by ensuring a fair, efficient, and transparent capital market.

MISSIONThe Securities and Exchange Commission shall actively promote

the development of a globally competitive Philippine capital market, effectively regulate and monitor its operations, and widely disseminate reliable information for the protection of the investing public.

To carry out the mission, the SEC shall harness its empowered human resources, functioning under a culture of efficiency and integrity, and delivering services through systems enhanced by appropriate technology.


Organizational ChartOrganizational ChartOrganizational ChartOrganizational Chart


NTD Organization ChartNTD Organization ChartNTD Organization ChartNTD Organization Chart

SEC Support/Clerical

Executive AssistantClerk/Messenger

SEC Actuary

Securities Specialist II

DIRECTOR

Asst. DirectorActuarialReview

Asst. DirectorMonitoring

& Audit

Asst. DirectorRegistration & Licensing

SEC Chief Counsel SEC Chief Counsel

Securities Counsel III Securities Counsel III


Securities Specialist II Securities Specialist I




Securities Specialist I







Securities Specialist II Securities Specialist II


ConclusionConclusionConclusionConclusion


Some InsightsSome InsightsSome InsightsSome Insights

• Individual circumstances of each jurisdiction must be taken into account in the consideration of a model.

• Regardless of structural models, enabling statutes must provide greater flexibility to regulators to cope up with fast changes in the market.


Thank You.Thank You.Thank You.Thank You.

Date post:	11-May-2018
Category:	Documents
Upload:	dinhxuyen
View:	221 times
Download:	2 times

SUPERVISORY STRUCTURE FOR PRIVATE PENSION … · philippine securities & exchange commission...

Documents