Press Release
February 2, 2016

Senate moves to improve retirement benefits of uniformed personnel

The Senate today approved on third and final reading a bill which seeks to deactivate the retirement system of the Armed Forces of the Philippines (AFP) and all the rest of the uniformed personnel and replace it with a new pension system that will cover the military, policemen, coast guards, firemen, jail guards and members of the National Mapping and Resource Information Authority (NAMRIA).

Sen. Antonio Trillanes IV, chairman of the Senate Committee on National Defense and Security and sponsor of Senate Bill No. 3088, said the new pension system, to be known as the Uniformed Personnel Retirement Benefit and Pension Reform Act, would be mandatory and contributory in nature.

He said the current retirement system of the AFP is non-contributory, with the budget coming from the annual General Appropriation Act (GAA). He said that no "seed fund" had been established when the Armed Forces of the Philippines and Separation Benefits System (AFP-RSBS) had been enacted into law.

According to Trillanes, existing retirement laws provide for the automatic adjustment of retirement pension based on the prevailing scale of the base pay of similarly ranked active personnel.

This form of budget sourcing, he said, would eventually lead to the ballooning of pension costs, which may no longer be sustained by our meagre government resources in the coming years.

Experts estimated that by the year 2022, the total pension cost of the retired AFP personnel would eventually surpass the salaries paid to its active personnel.

"If this condition is allowed to persist, the government will eventually fail to provide adequate retirement pension to the uniformed personnel," Trillanes warned.

Trillanes said the proposed bill seeks to deactivate the AFP-RSBS to formulate a mandatory contributory scheme and establish a Uniformed Personnel Retirement Fund (UPRF) to source the "seed fund" for all uniformed personnel.

The new pension system will be managed by the Government Service Insurance System.

Under the proposed bill, new entrants would be required to contribute nine percent of their monthly compensation to the UPRF as their personal share while the national government would contribute a corresponding share of 18 percent to be sourced from the annual general appropriations.

In addition, the national government would contribute 27 percent representing the monthly contribution of the active uniformed personnel.

The bill also calls for the standardization of the monthly retirement pay of uniformed personnel. The new entrants of the uniformed services, upon retirement, shall be entitled to receive a monthly retirement pay equivalent to 2 ½ percent for each year of active service rendered but not exceeding 90 percent of the monthly base and longevity pay of the grade next higher than the permanent grade last held.

According to the proposed bill, the retirement benefits and pension of all new entrants shall not be subject to automatic adjustments based on the prevailing scale of the base pay of active uniformed personnel.

On the other hand, the existing and future retirees shall continue to receive retirement benefits and pension and their corresponding automatic adjustments. The funding will still be sourced from the GAA. (Yvonne Almirañez)

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