A reaction to the industry bailout in times of need The concept of pre-emergency plans is a savings mechanism aimed at securing future needs. Pre-need companies offer plans that provide for future educational costs, pensions upon retirement, and memorial services upon the death of plan holders. Just recently, pre-need companies have been in controversy because the Senate found that some of these companies can no longer meet the needs of plan holders due to their financial difficulties. Among the causes of the pre-need sector collapse are the following: (1) tuition deregulation in 1992 which led to skyrocketing tuition fees, (2) lower interest returns on trust fund investments due to the crisis 1997 Asian Financial Report, (3) weak regulation, (4) poor accounting practices, (5) collusion between troubled companies and their affiliates, and (6) corporate indiscretion. Tuition deregulation has taken a heavy toll on the finances of pre-need companies who have enjoyed significant gaps between tuition and ROI. The gap began to narrow after deregulation in 1992. Tuition and ROI began to equalize in 1997. By 2004, the gap had widened causing a variance of nearly 20%. It took 10 years for the negative impact of tuition deregulation to fully materialize, as trust funds and sales could no longer cover the growing obligations. On the other hand, the Asian financial crisis that erupted in 1997 caused a slowdown in the economy of countries in the Asian region, including the Philippines. The stock market has crushed and destroyed the pre-need industry's trust fund investments. The SEC is partly responsible for the collapse of PNCs. As a regulatory body, the SEC could have prevented some of the problems, such as flaws in traditional or open-ended education plans, poor accounting practices, and possible collusion between trust banks and PNCs. However, the SEC intervened too late. According to the SEC, the entire pre-need industry used aggressive accounting practices that underreported liabilities and tended to present a rosier financial picture than warranted. As a corrective measure, the SEC in 2002 mandated the use of the Pre-Need Uniform Chart of Accounts (PNUCA) as the standard for reporting finances and liabilities. With the PNUCA in force, social security and pension plans were no longer treated as investment contracts but as insurance contracts, subject to the Actuarial Reserve Liability (ARL) scheme. These changes in accounting methods further weakened pre-need companies' balance sheets and effectively limited their investment activities.