WITH pre-need companies again under intense public scrutiny, Thomasians holding on to practically worthless education plans are reiterating their appeal for the government to help them recover their investments.
Meilin Hong, a senior Medical Technology student, said that it was hard to accept that the educational plan her parents bought from the College Assurance Plan (CAP) 20 years ago could not be used to pay her tuition.
Hong, who enrolled in UST in 2005, was among the first CAP “scholars” to find out that their pre-need firm had sunk into deep financial trouble.
“When I was in first year, CAP was still able to give us P11, 000. However, they made it clear to us that the money we received was also the last that we could get from them,” Hong said.
CAP and other pre-need companies like Pacific Plans, Platinum Plans, Capitol Plans, The Professional Group (TPG), and Asian Diamond Plans closed shop one by one at the height of the local pre-need industry’s troubles five years ago. Last year, the Legacy pre-need group of businessman and small-town mayor Celso de los Angeles went bankrupt, and stands accused of running a pyramid scam.
These pre-need companies have more than one million educational plan holders – CAP with 940,603, Pacific Plans with 34,000, Platinum Plans with 20,000, and TPG with 130,000.
The CAP management refused to disclose the number of clients in the University.
The failure of pre-need firms had been traced to the so-called open-ended or “traditional” educational plans they had originally marketed to parents. Such plans carried a guarantee of paying the full tuition whatever the amount was.
But pre-need firms did not forsee huge increases in tuition and failed to make the necessary investments to cover these obligations. As pre-need firms’ trust funds began to dwindle, the Securities and Exchange Commission (SEC) ordered a ban on traditional plans in 2002.
Ma. Irene Calingo, mother of an incoming Nursing sophomore, was also unable to claim the full amount of her daughter’s educational plan from Pacific Plans, which has been sold by the Yuchengco family to an investment banker.
“We bought the educational plan package for elementary and high school for my two daughters,” Calingo told the Varsitarian.
Her oldest daughter, now a senior Psychology student, was able to use the educational plan in elementary and high school.
But, her youngest daughter, Mara, was only able to use it up to her sophomore year in high school.
Pacific Plans gave them money in 2006 and told them that they would no longer be able to pay the full amount of the plan, she said.
“As a parent, it is really irritating that after I worked hard in investing for my daughters’ educational plans, the pre-need company that should be sustaining the funds for the tuition and other fees had failed to do so,” Calingo said.
Plan holders’ unity
PEP (Parents Enabling Parents) Coaltion president Philip Piccio, a UST alumnus, advised plan holders to stand up and fight for their rights.
The group, composed of plan holders of Pacific Plans, is opposed to the company’s rehabilitation plan being studied by the courts.
“The government failed to act as a regulator. The government was not able to comply with their obligations to the plan holders by not being reactive to our situation,” Piccio told the Varsitarian.
The court proceedings have allowed Pacific Plans to discontinue the payment of tuition to traditional and open-ended plan holders.
The government should have at least alerted the public on the financial situation of the pre-need firms, he said.
Piccio said the coalition had been able to assist many Thomasian plan holders.
“Being a Thomasian, I should be able to help my fellow Thomasians,” said Piccio, who took up Asian Studies and attended law school at UST.
‘Double your money’
Faculty Union vice-president Gil Garcia bared that the Legacy Group attempted to sell investment schemes to the union in 2005.
The pre-need company offered the union a “double-your-money-scheme” with 20 to 25 percent interest per annum.
Garcia said that the union turned it down, noting that the interest offered was much higher compared with the 10 percent interest offered by banks.
“We (the officers) thought that the offer of Legacy was feasible but very risky. We told them that the rates they were offering were much higher than the current rates offered by banks at that time,” said Garcia.
Be wise and vigilant
College of Commerce Finance department chairman Ramon del Rosario said pre-need companies promising high returns on a small investment are suspect.
“The higher the risk, the higher the returns, but we really don’t know what will happen in the future,” Del Rosario said.
Del Rosario said pre-need plan holders should be vigilant by watching their investments closely.
“For those who are thinking of investing now, save first in a bank before investing in a pre-need company,” Del Rosario said.
Government’s role
Faculty of Arts and Letters Social Sciences department chairman Emmanuel Lopez told the Varsitarian that the government should implement laws and not just focus on documentating the case of the failed pre-need companies.
“Filipinos from the lower and lower-middle classes availed (themselves of) these pre-need plans to prepare (for) the future of their loved ones. But as it turned out, these companies have closed down. The government should then protect the welfare of the public,” Lopez said.
SEC secretary Gerard Lukban said plan holders should remember that upon signing a contract, the agreement is solely between them and the pre-need company. The way these companies do their businesses is out of the commission’s jurisdiction, he said.
“The plan holders should know that the SEC can’t assure them that the company of their choice would not fail,” Lukban told the Varsitarian.
Lukban said companies themselves have decided to stop selling traditional educational plans because of the difficulty of predicting how much the tuition and other fees would increase in different colleges and universities.
“This kind of business used to be profitable to the companies and beneficial to the plan holders. The companies could even sell the plans at a higher price before, while the plan holders can transfer the unused plan to another beneficiary,” said Lukban.
Pre-need companies now offer “fixed” educational plans that promise to pay only a certain amount every semester.
“SEC’s faced with the situation of being a regulator (and) people are trying to put the blame on us. Although we understand the concerns of the plan holders, we are not sure that the company won’t collapse,” said Lukban.
SEC is open to entertain questions regarding pre-need companies, he said.
“We can assist the plan holders in choosing the companies that are competent. But at the end of the day, it is still their decision,” said Lukban.With reports from Alena Pias P. Bantolo and Danielle Clara P. Dandan
