Pension crisis looms in police, military

BUDGET Secretary Florencio Abad on Monday warned of a looming pension crisis at the military and the police, saying that the government will soon have to allocate a far bigger budget for retired soldiers and policemen than for those in active service.

Describing the system at present as “unsustainable,” Abad added that his department has collaborated with the Government Service Insurance System (GSIS) to conduct an actuarial study and device a system that would provide safeguards on contributions of members and sound financial basis for computing deductions, and ensure sustainability of the military retirement system.

“We have to resolve this looming problem in the pension of our uniformed personnel decisively at the soonest time possible. It is very likely that in the next five years, the government will allocate more funds for the pension requirements of retired military personnel than the salaries of those still active in service,” he said.

Pension benefit requirements of the military—under the Armed Forces of the Philippines (AFP) and the Philippine Veterans Affairs Office (PVAO)—would amount to P67 billion by 2016.

This amount would overtake projected personal services requirements for active staff that amount to P63.7 billion, Abad said.

There is now a growing amount of pension arrears since soldiers, just like policemen, retire at age 56, while civilian government employees retire at age 65.

The government shoulders multiple pension packages for the military and other uniformed personnel.
Unlike other civil servants, military and uniformed personnel do not contribute premiums to a pension fund.

Abad said that the current system wherein the government shoulders the benefits given to retired military personnel is “unsustainable.”

He agreed with a recent statement of Retirement and Separation Benefits System President Emilio Marayag that a big problem that needs to be addressed is the growing amount of pension arrears.

Abad also agreed with Marayag’s analysis that indexation of retirement benefits to salaries of active personnel has been a key cause of the problem.

He also warned that the magnitude of pension benefit requirements of military, police and other uniformed personnel is projected to increase by more than 100 percent to a total of P111 billion in 2016, from the proposed budget level of only P52 billion for next year.

While the result of the actuarial study is yet to be released, Abad proposed several administrative remedies to address the looming pension crisis.

These include stopping the AFP from paying pension arrearages since no amount was appropriated for the purpose and PVAO setting a prescriptive period on the receipt of applications and processing of claims of new veterans and reviewing and updating the list of pensioners to eliminate “ghost” pensioners.

At present, the government shoulders multiple pension packages for the military and other uniformed personnel, including the three-year lump sum benefit, regular monthly pension, old age pension, total administrative disability pension, survivor benefit (PVAO), survivorship benefit (AFP), educational benefit, burial assistance and regular disability benefit. –Jaime Pilapil And Katrina Mennen A. Valdez, Reporters, Manila Times