Clients of Permanent Plans Inc. flocked to the Makati headquarters of the pre-need firm Wednesday after news that the Securities and Exchange Commission has revoked its license to sell new pension plans last week.
In a statement Tuesday, Permanent Plans president Juan Miguel Vazquez promised to honor all their obligations to their plan holders. The mode of settlement, however, worried the plan holders.
In an interview with ABS-CBN News, the plan holders said the company has informed them that they will be reimbursed their pension plan investments through the following: 60 percent “in kind” and 40 percent in cash.
The “in kind” payment includes slimming teas and medicines, both products of companies associated with Permanent Plans.
The cash portion, meantime, will be paid through post-dated checks.
On Tuesday, SEC spokesperson Gerard Lukban said they did not approve this settlement plan, which was proposed after the company incurred trust fund deficiencies, or the amount the company has and should have set aside to settle its obligations to clients.
In his statement, Vazquez insisted they do not have to get SEC’s nod for the settlement plan since their contracts with clients allow them to change payment mode.
Permanent Plans is one of the small players in the pre-need industry with just about 10,800 plan holders as of end-December 2008. But its president, Vasquez, led the highly influential Federation of Pre-Need Plan Companies that had lobbied for softer regulations in recent years.
In February, another cash-strapped pre-need firm Pryce Plans Inc settled its obligations to clients with medicines, cooking gas, and memorial lots.
At the time, a pre-need plan holders association had warned that more pre-need firms were on the brink of collapse due to their funding shortfalls.
On Monday, SEC told a senate hearing that it had stopped 31-year old Prudentialife Plans Inc from selling new products due to funding shortfalls. - with reports from ABS-CBN News