'Government to save P11 billion a year with reforms in AFP retirement system'

MANILA, Philippines - The government will save P11 billion annually once reforms are implemented in the military’s retirement system, an official of the Armed Forces Retirement and Separation Benefits System (RSBS) disclosed yesterday.

RSBS president Emilio Marayag said the proposed reforms would address concerns that the government might be spending too much on retirees’ benefits.

“Our initial estimate is that once these (reforms) are approved, (the government would save) P11 billion per year,” Marayag said in a chance interview during the 35th anniversary of RSBS last Thursday in Quezon City.

He said the figure is based on the assumption that retired officers’ pension would increase by 11 percent while that of enlisted personnel would grow by 16 percent.

Marayag said the government would spend an additional P900 billion for pension benefits in 29 years if the current system were retained.

“Instead of spending P100 million (for benefits), the government would have to spend P1 trillion in 29 years,” he said.

The government shoulders the benefits given to retired military personnel. However, the amount of pension arrears is growing due to the increasing number of retirees. There are about 4,000 to 5,000 new retirees every year.

Another cause of the increasing pension requirement is the “indexation” provision of the retirement law, which raised the retirees’ benefits whenever the salaries of active soldiers are upgraded.

RSBS data showed that the average increase of pensions in the last 30 years is 11.5 percent for officers and 16.4 percent for enlisted personnel. Such adjustments meant more obligations for the government, RSBS said.

The government owes around P16 billion to about 112,000 military pensioners.

Marayag called for the scrapping of the indexation provision of the current retirement law.

The proposal seeks pension adjustments to be implemented every five years and determined by a board of a new military retirement agency.

Marayag’s proposals would be contained in a draft bill to be submitted to lawmakers.

Once the bill is enacted into law, RSBS would be deactivated in three years to be replaced by a state-run firm called Philippine Military Pension System.

The reforms will only cover new military personnel and not the current pensioners or those already in the service.

The new retirement body would require seed money worth P120 billion to allow it to invest in profitable ventures and be self-sufficient.

Marayag is hopeful that the proposed retirement system reforms would become part of the priority measures of Congress.

“I urge the soldiers who are in favor of our proposal to urge their legislators to support the reforms we are pushing,” he said.

Marayag said the discussions on the proposed pension reforms have been deferred pending the results of an actuarial study being conducted by the Government Service Insurance System (GSIS).

“They (GSIS) would compute if our computations our correct given the changes in the benefits,” he said.