Philippine Stock Exchange (PSE) requested the state-run social insurance programs, the Government Service Insurance System (GSIS) and the Social Security System (SSS), to restart the defunct Stock Investment Loan Program (SILP), in an effort to enhance brand status, strengthen capital market, elevate public accountability, improve corporate governance, increase operational transparency, broaden retail ownership participation and reduce institutional ownership concentration. Members and pensioners who availed themselves of the SILP can repay their loans through the sale of stocks, cash payment before maturity and deduction from any benefit due to the members and pensioners following separation or retirement from the service or death. After its maiden offering that preceded the 1997 Asian financial crisis, SILP became unprofitable because the stocks that the GSIS and SSS funded were deemed unrecoverable which persuaded them to embark on a condonation program to unload nonperforming loans. Members and pensioners were able to settle their SILP obligations at a 100% condonation on penalties and surcharges and a 50% condonation on interest. While the onset of the said financial crisis was one of the reasons that caused the regional stock market meltdown and eventual severe bear market, we cannot deny the fact that most members and pensioners who participated in the SILP did not have the necessary financial education to invest in stocks. They jumped on the bull market bandwagon that began in 1990 unaware of the high risk-high reward proposition of stock market investing. What started as multifold gains during the bull run years, ended as multifold losses during the bear hug years. Although we commend the PSE for developing and implementing programs to increase the stock trading accounts and participation of the members and pensioners, it would be in the best interest of the latter to complete and pass a PSE-sanctioned financial education course focused on stock market investing before being made eligible for SILP. This may not be enough to minimize the potential losses that members and pensioners can endure but at least it can educate them about the risks associated with stock market investing. It is worth mentioning that the phrase past performance is not indicative of future results and is a standard disclaimer in investment materials required by the Securities and Exchange Commission (SEC). The purpose of which is to prevent investors from assuming that historical returns guarantee future gains protecting their investments from unrealistic expectations when evaluating stocks and other related financial assets.
