AFP faces P1 trillion arrears in 2040

THE Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) wanted to reduce the pension increases of retired soldiers to 10 percent every five years from 11.5 to 16.4 percent to arrest its ballooning arrears that is expected to reach more than P1 trillion by year 2040.

AFP-RSBS President Emilio Marayag said Tuesday that that they like to remove a provision in Presidential Decree 1638 or the Pension Law, mandating a corresponding increase on the pension of retirees when there is a raise in the salary of active soldiers.

“We will task the new proposed board of trustees to determine the rate of increase of pension. We like to remove provision that each time active soldiers receive pay increases, the pension of retired soldiers also increase,” Marayag added.

Marayag said they would submit soon their recommendation to Malacanang for the President’s approval, hoping that it would be endorsed to Congress as one of the priority bills of the administration.

He clarified though that the new proposed system would only be applicable to new entrants in the AFP and will not affect those in active service now and those receiving pension except automatic indexation.

Over the past 30 years, Marayag further said, there already 21 pay increases at a rate of 11.5 percent for officers and 16.4 percent for enlisted personnel.

“At a rate we’re going, government may not be able to support pension of soldiers,” he pointed out.

Marayag warned that non-passage of their proposed reforms would have a big impact on the economy because it would eat up a big chunk of the national budget, which, he stressed, “ would not be good for the economy.”

The AFP spokesman, Commodore Miguel Juan Rodriguez, said the military leadership is supporting the proposed new system on pension.

“Our capability to pay and pension should be balanced. The armed forces would be the primary beneficiary for this,” Rodriguez said.
At present, there were some 112,000 pensioners and 4,000 to 5,000 soldiers retire from the service every year.

A report from Col. Rolando Jungco, Chief of the AFP Pension and Gratuity Management Center, showed that the funding requirement for the retirement benefits of the soldiers have ballooned to P16 billion.

The funding problem started in 2006 when the AFP-RSBS was deactivated due to irregularities that include investments in low-return real estate projects and questionable loans.

Adding to the funding woes is a provision in PD 1638, mandating a corresponding increase on the pension of retirees when there is a raise in the salary of active soldiers. –WILLIAM B. DEPASUPIL REPORTER, Manila Times