By Fil V. Elefante @elefantefil & Rene Acosta @reneacostaBM
Conclusion
IT was this year that an old military institution was ordered abolished.
Through Memorandum Order (MO) 90, issued on April 8, Malacañang ordered the deactivation of the Retirement Separation and Benefits System (RSBS) of the Armed Forces of the Philippines (AFP).
MO 90 pointed to the findings of the Feliciano Commission, which said the RSBS, “in its present conception and structure, was fundamentally flawed and had not discharged its mandate.”
The Feliciano Commission was created in the aftermath of the mutiny staged by members of the Magdalo during the term of former President Gloria Macapagal-Arroyo, wherein the group of soldiers hurled accusations of mismanagement of funds and corruption against the military leadership.
An actuarial report prepared by another firm on the RSBS also indicated that the military’s retirement and pension plan was projected to achieve its financial “self-sustaining status” by the year 2058, and that its funds “shall be exhausted within 32 years after achieving self-sufficiency in the year 2090.”
Since it has not attain self-sufficiency status yet, the RSBS has never granted pensions to retired soldiers, other than returning their contributions.
Plans and promises
SIX years ago then-Defense Secretary Voltaire T. Gazmin acknowledged the problem, promising that any pension-payment shortfall will be made good by the government eventually. The pension backlog will be treated as a debt incurred by the government.
“That’s a debt, so we will pay that debt,” Gazmin said at the time, adding that the shortfall will be paid in due time. A longtime military pensioner told the BusinessMirror he and his fellow pensioners have heard of such promises before. But they would prefer to hear a concrete plan that would solve this problem in the shortest possible time.
“We are not getting any younger,” the pensioner said, declining to be named for fear of reprisal.
Gazmin said he is aware of his fellow former soldier’s woes. He assured his fellow pensioners that the shortfall will be paid. “We cannot pay you in full, all in one go.” By 2011, a technical working group (TWG) was formed by the AFP and the Department of National Defense (DND) to look for solutions.
They proposed to change the military retirement age from 56 to 58 years old. The group also recommended the increase in the minimum number of years of service before a soldier can avail themselves of retirement, from 20 years to 25 years.
The TWG also proposed the deactivation of the RSBS and the creation of a dedicated pension fund for soldiers with an accompanying counterpart funding from the government. The group also recommended the recall of automatic pension hikes for military retirees whenever active military soldiers receive pay hikes.
Aquino’s Sona
THEN-President Benigno S. Aquino Iii acknowledged the problem arising from the relationship of salaries and pension of the personnel of the AFP and the Philippine National Police (PNP).
In his 2013 State of the Nation Address (Sona), Aquino said the true situation of the AFP and the PNP pensions is that “[n]o contributions have been made, but there are payments to make.”
“Apart from this, the pensions of retirees have been indexed to the salaries of active personnel.”
Aquino explained that the pension scheme as organized when he became commander in chief was part of the pension-deficit problem.
“This means that if the salaries of those in the service increase, so, too, will the pensions received by retirees or qualified families,” he said. “Yearly, there are more and more men and women retiring, so, naturally, the obligations that must be paid out also increase.”
“We need a system that fulfills our civic obligations to our policemen and armed forces; and it is likely that we will request the assistance of the GSIS [Government Service Insurance System] in this regard,” Aquino said.
The chief executive said that time his administration is “currently studying the feasibility of using reclaimed land to generate funds that will form part of the solution.”
“After all, we cannot surprise the GSIS and ask them to account for the entirety of our needs, which is why an even more thorough study will be conducted to create a fair, sustainable and clear mechanism for the pensions of PNP and AFP personnel.”
Escudero proposal
THE idea of bringing in the expertise of the GSIS came from Sen. Francis G. Escudero in 2011.
Escudero has recommended that the GSIS handle the pension of all the government’s retired uniformed personnel, which includes soldiers, jail guards, policemen and firemen.
“As government employees, it makes sense that the GSIS should handle their pension system,” Escudero had explained.
In 2009 records obtained from the AFP Finance Center showed that the number of military pensioners increased by nearly 8,000, from 98,978 in fiscal year 2006 to 106,910 in fiscal year 2009.
By 2015, the number of military pensioners has exceeded 120,000.
In 2008 P12.832 billion was released for military pension payments. By 2009, it rose to P14.889 billion.
By 2010, the budget allocated for pensions was P19.393 billion with about P16 billion, unpaid in benefits.
By 2015, the pension backlog increased to P18 billion.
What happened to the proposals designed to deal with this situation that was made by a TWG back in 2011?
Shortly before the end of his administration, Aquino signed Memorandum Order 90 abolishing the RSBS. This action by Aquino meant that since 2011, only one suggestion became reality. The rest of the proposals remained just words on paper.
Proposals revived
THE Duterte administration now has to carry the burden of solving the problem of the military-
pension backlog.
Once again, the idea of having the GSIS handle the military pensions has been revived.
According to reports, Budget Secretary Benjamin E. Diokno said the Duterte administration was once again looking at this proposal, a suggestion forwarded by Escudero five years ago.
Diokno acknowledged that integrating the military-pension system with the GSIS would require a massive infusion of funds.
The amount would range between P2.04 trillion to as much as P5.5 trillion.
Diokno said the Duterte administration was also looking at the possibility of repealing Presidential Decree 1638 and instituting a more sustainable military pension law, which was also another recommendation made in 2011. According to a study by the AFP in 2012, it was estimated that the amount needed to pay military-pensions would be P54.1 billion by 2017.
Four years later, that estimate has already been exceeded. According to the Department of Budget and Management, under the 2016 national budget, about P56 billion of the DND’s budget of P177 billion will be used for its pension and gratuities fund. And the amount set aside for military pensions will continue to eat into the DND’s budget the longer the situation is left untended.
With reports culled from the Philippines Graphic magazine