MANILA - The Securities and Exchange Commission (SEC) is requiring pre-need companies to increase trust fund deposits to ensure delivery of benefits to their plan holders.

In a recent memorandum, the SEC en banc said the minimum trust fund contribution of pre-need firms should be 50 percent of the total amount collected from issued life plans, and 60 percent of total amount collected from education and pension plans.

At present, pre-need firms deposit 45 and 51 percent of what they collect from life plans, and education and pension plans, respectively.

This means that for every P1 earned, a pre-need firm will have to put in P0.50 to P0.60 to the trust fund instead of only P0.45 to P0.51.

SEC said the decision was made "to further protect the interest of plan holders and enable the pre-need companies to efficiently meet their contractual obligations."

The trust fund is a capital and asset account which must provide sufficient money to pay for any obligation, including claims of plan holders. It is managed by several trustee banks which decide where to invest the funds to ensure maximum return.

SEC's new order will be implemented for new pre-need plans registered with the commission on or before July 15 as well as unsold plans with pending application for price increase.

The SEC has been tightening its supervision over the pre-need industry after the collapse of several pre need firms because of the global financial crisis.

The SEC earlier assured the public that the 22 operating pre-need companies in the country are financially strong. It noted the firms, which have a total of 1.5 million plan holders, are backed by a trust fund amounting to P62 billion.