GSIS open to manage new pension system
The state-run Government Service Insurance System (GSIS) is open to manage a new pension scheme for newly installed uniformed personnel, but cannot absorb existing retirees as the indexation of benefits they currently enjoy will be unsustainable for the pension fund, its newly appointed president and general manager Jesus Clint Aranas said.
“We’re very welcome to that. It’s just that, if ever we’re going to take over the fund of the pensioners of the uniformed personnel, we would like to enroll the newly hired and commissioned officers, not the existing, because we cannot afford it,” Aranas told the Inquirer.
Not sustainable
At present, uniformed personnel enjoy indexation of benefits, which means that even when they retire, they still get a similar increase in benefits when active members receive a pay hike, Aranas noted.
“The GSIS fund cannot support that. It is not sustainable for us. First, they have not contributed to us, so it will be very hard for them to come in the middle of the game wherein there were no contributions made to us and then we’ll be subjected to a contract where even our existing members and pensioners are affected,” he said.
‘High risks’
Aranas said that despite the “high risks,” the GSIS was open to managing a separate fund for incoming uniformed personnel.
“The terms may be different because they are ‘high risk.’ They have a high risk premium—they retire at 55 and they are very fit. They will enjoy their pension for a long time but will contribute for a short period because they retire early, and they don’t die young,” he said.
“It’s not that we want them to die young, but what I’m saying is that the fund [for uniformed personnel] may not be sustainable, and if ever we’re going to do that, we’re going to separate the fund from the other funds we are holding; otherwise, the other funds will be affected,” he said.
Aranas said that a “bespoke” pension system was in the works for uniformed personnel.
“We cannot deviate so much on the benefits, because it will be unfair to the existing members and pensioners. But, maybe, in our contract with them, the policy, the premium and the contribution rate will be bespoke because, remember, uniformed personnel are always exposed to risks because of the nature of their job,” Aranas said.
Pension scheme
Asked if the benefits under a pension scheme for uniformed personnel managed by the GSIS would be less attractive compared to the benefits being enjoyed by pensioners at present, Aranas replied: “It’s not about what is attractive or not; the question is: Is it sustainable? Can we actually afford the good intentions?”
For next year, P75 billion will go to uniformed personnel’s pension payments, and could balloon up to 80 percent of the Armed Forces of the Philippines’ annual budget if left unaddressed, Budget Secretary Benjamin Diokno had said.
The Duterte administration was worried about the ballooning pension of uniformed personnel.
