The 9-12-3 Rule: GSIS Premium Contribution Rates

Pursuant to Section 5(a) of Republic Act No. 8291 otherwise known as “An Act Amending Presidential Decree No. 1147, as amended, Expanding and Increasing the Coverage and Benefits of the Government Services Insurance System, Instituting Reforms Therein and for Other Purposes:

SECTION 5. Contributions. — (a) It shall be mandatory for the member and the employer to pay the monthly contributions specified in the following schedule:

The above GSIS contribution rates and the basis for the computation is applicable for regular members covering the period from June 24, 1997 until December 31, 2002, pursuant to Section 11.1 of the Revised Implementing Rules and Regulations of RA 8291.

However, effective January 1, 2003, the rate of contribution payable by the regular member and government agency shall be 9% and 12% respectively, based on the actual monthly salary of the member, pursuant to Section 11.1 of the Revised Implementing Rules and Regulations of RA 8291 approved on June 23, 2010 under Board Resolution No. 88.

On the other hand, special members that include constitutional commissioners, members of the judiciary and those with equivalent ranks are required by law to remit to the GSIS, three (3) percent of their regular monthly compensation for both employees’ and government agency’s share as life insurance premiums to answer for their life insurance benefits defined under RA 8291.

Who is a GSIS member?

Employee or Member — Any person, receiving compensation while in the service of an employer as defined herein, whether by election or appointment, irrespective of status of appointment, including barangay and sanggunian officials.

Section 1.A(d), RA 8291

Under the GSIS law, there are two (2) types of GSIS members — regular member and special member.

Regular members are those employed by the government of the Republic of the Philippines, national or local, legislative bodies, government-owned and controlled corporations (GOCC) with original charters, government financial institutions (GFIs), except uniformed personnel of the Armed Forces of the Philippines, the Philippine National Police, Bureau of Jail Management and Penology (BJMP) and Bureau of Fire Protection (BFP), who are required by law to remit regular monthly contributions to the GSIS. [Ref]

On the other hand, special members are constitutional commissioners, members of the judiciary, including those with equivalent ranks, who are required by law to remit regular monthly contributions for life insurance policies to the GSIS in order to answer for their life insurance benefits defined under RA 8291. [Ref]

Who is an Employer?

Employer — The national government, its political subdivisions, branches, agencies or instrumentalities, including government-owned or controlled corporations, and financial institutions with original charters, the constitutional commissions and the judiciary.

Section 1.A(c), RA 8291

What does it mean by “monthly compensation” as far as GSIS is concerned?

Compensation — The basic pay or salary received by an employee, pursuant to his election/appointment, excluding per diems, bonuses, overtime pay, honoraria, allowances and any other emoluments received in addition to the basic pay which are not integrated into the basic pay under existing laws.

Section 1.A(i), RA 8291

Relatedly, contribution means the amount payable to the GSIS by the member and the employer in accordance with Section 5 of the subject law.

What does GSIS mean by “average monthly compensation”?

Average Monthly Compensation (AMC) — The quotient arrived at after dividing the aggregate compensation received by the member during his last thirty-six (36) months of service preceding his separation/retirement/disability/death by thirty-six (36), or by the number of months he received such compensation if he has less than thirty-six (36) months of service: Provided, That the average monthly compensation shall in no case exceed the amount and rate as may be respectively set by the Board under the rules and regulations implementing this Act as determined by the actuary of the GSIS: Provided, further, That initially the average monthly compensation shall not exceed Ten thousand pesos (P10,000.00), and premium shall be nine percent (9%) and twelve percent (12%) for employee and employer covering the AMC limit and below; and two percent (2%) and twelve percent (12%) for employee and employer covering the compensation above the AMC limit.

Section 1.A(l), RA 8291

When to remit to the GSIS the premium required?

According to the above-stated revised IRR, each government agency shall remit directly to the GSIS the employees’ and government agency’s contributions within the first ten (10) days of the calendar month following the month to which the contributions apply.

It is mandatory under the law for government agencies concerned to deduct from the fixed monthly compensation the personal share of the members and to promptly remit the same to GSIS.

Accordingly, it is prohibited for a government agency to delay the remittance to GSIS of the premium contributions deducted from the compensation of the members and use it for other purposes.

Penalty for Delayed Remittance

Section 7 of RA 8291 provides that agencies which delay the remittance of any and all monies due the GSIS shall be charged interests as may be prescribed by the Board but not less than two percent (2%) simple interest per month. Such interest shall be paid by the employers concerned. [Ref]