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Crisis over AFP, PNP pension fund

By Gil C. Cabacungan Jr.
Philippine Daily Inquirer
First Posted 01:21:00 09/13/2010

Filed Under: Military, Police, Wages & Pensions, Retirement, State Budget & Taxes

MANILA, Philippines?A crisis involving the pension fund of military and police personnel is looming, with the government facing the prospect of forking out more money for the retirement benefits of soldiers and policemen than for the salaries of their comrades in active service.

Under Malacañang?s proposed national budget for 2011, P100.597 billion is allocated for the salaries of the 250,000 to 300,000 members of the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP).

A total of P53 billion is set aside for the pension of retired military and police personnel, or one-fifth of the projected budget deficit next year.

There are roughly 120,000 retirees in the AFP and 50,000 in the PNP.

Sen. Ralph Recto, chair of the ways and means committee, said the P53-billion pension allocation for the military and police personnel was glaring when compared with the P22 billion in annual benefits given by the Government Service Insurance System (GSIS). More than 1 million government employees are members of the GSIS.

At this rate, Recto said the government would be paying more for retired soldiers and police personnel by 2019 than those in active duty.

?The government has to address the problem before it explodes in our faces and we end up spending more for the retirees than those in active service,? he said in an interview.

At a Senate hearing last week, Budget Secretary Florencio Abad Jr. raised the possibility that the government would be spending more for the pension of retired soldiers and police personnel than the salaries of those still in uniform.

?That is an area of concern not only for the uniformed personnel of the PNP and the AFP, but also for the judiciary because these institutions do not contribute to the pension fund like GSIS. (The benefits) to members are coming out of the appropriations,? Abad said.

Retirement age

Another factor contributing to the pension problem was the retirement age of soldiers and policemen, Recto said.

Soldiers and policemen retire at 56 years old, lower than the norm of 60 to 65 years old, thus giving them a longer period for enjoying benefits.

The national government has to shoulder the pension of soldiers and police personnel because they have no retirement system.

The military was supposed to have its own self-sustaining pension fund through the AFP-Retirement and Separation Benefits System (AFP-RSBS), which was formed in 1973. The agency was shuttered four years ago when it went bankrupt due to gross mismanagement by generals on its board.

The police have been getting their pension from the National Treasury since the PNP was spun off from the defunct Philippine Constabulary in 1991.

Recto said the collapse of the AFP-RSBS was the main reason the government was spending heavily for the military and police pension fund.

Pampered lot

Recto and Abad noted that compared with other government workers, soldiers and police personnel were a pampered lot. Besides the early retirement age, they get monthly pension equal to those received by counterparts in active service.

For example, a general who retired 15 years ago would be getting the same amount due a four-star general in active service, according to Recto. In addition, soldiers and policemen retire at the next higher rank, he said.

Moreover, their pension increases by P5,000 when they reach 65 and 70 years of age aside from the total disability benefits amounting to P1,700.

?We have to look at all these factors and assess the viability of the military and police pension fund system because the government cannot sustain this for long. We must have a self-sustaining pension fund in place,? Recto said.

Abad said the Department of Budget and Management would conduct a study of the military and police pension fund system and recommend how to make it more sustainable without being a huge burden on the government.



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