SEC monitors 12 pre-need firms offering open-ended education plans
July 4, 2005
Byline: ANA MARIE MACUJA
The Securities and Exchange Commission (SEC) is closely monitoring 12 pre-need companies that have offered traditional or open-ended education plans.
Of the 12, four have had their dealers license suspended or revoked. The four include College Assurance Plan Philippines, Inc. (CAP), Pacific Plans, Inc. (PPI), Platinum Plans, Inc. and Scholarship Plans, Phils., Inc.
The remaining eight include Eduplan Phils., Inc., Eternal Plans, Inc., Legacy Consolidated Plans, Inc., PET Plans, Inc., Prudentialife Plans, Inc., Pryce Plans, Inc., TPG Corp., and Trusteeship Plans, Inc.
To recall, PPI claimed its liquidity problem is caused by its open-ended plans. The company said the deregulation of tuition increases in 1990 placed in peril the companys obligations under the open-ended or traditional plans.
PPI earlier claimed as a result of the deregulation, its obligation under the open-ended educational plans ballooned to a level not originally projected by the company.
“The deregulation of tuition fees has caused a tremendous rise in the cost of education, which in turn put an enormous pressure on traditional (open-ended) plans and their respective trust funds considering that pre-need companies dealing in such securities could not pass on the additional cost to their planholders,” PPI claimed.
PPI stopped selling open-ended education plans in 1992, 10 years ahead of a directive from the SEC putting to a stop the sale of such type of education plans.
The SEC, on the other hand, has been criticized for allegedly not doing its job to prevent the financial turmoil of companies such as PPI and CAP.
The SEC has also received criticisms for not immediately putting to a stop the sale of open-ended plans. The SEC directed pre-need firms to stop selling this type of education plan only in 2002.