Defense Secretary Gilberto Teodoro Jr. (INQUIRER file photo / GRIG C. MONTEGRANDE)
MANILA, Philippines — The “burden” of the pension of the Armed Forces of the Philippines’ (AFP) personnel will reduce over time since the size of the armed forces is constant, unlike other uniformed services, Department of National Defense (DND) Secretary Gilberto Teodoro Jr. said on Wednesday.
“I must point out that the AFP will not increase its force size in the same manner as the other services, whose numbers are tied in to the country’s growing population,” Teodoro said in a statement as the House of Representatives continues to tackle the reform for pension of the Military and Uniformed Personnel (MUP).
“Hence, the pension burden of the AFP retirees on government expenditures will actually reduce over time as the envisioned AFP retirement trust fund becomes viable as a funding source given a constant force size,” he added.
Teodoro said the agency could use available real estate assets as well as the share of the income from the Bases Conversion and Development Authority and other DND-related Government Owned or Controlled Corporations for the proposed AFP Retirement Trust Fund.
“We thank our legislators for understanding the position of the Department on the issue of pension reform and on our part we pledge to exert our utmost efforts in transferring available real estate assets into the proposed AFP Retirement Trust Fund,” Teodoro said.
“I would like to emphasize that the DND is not ignoring pension reform but, is in fact, helping to craft a sustainable one, which will also include the creation of the trust fund previously mentioned, which when valued, will certainly not be inconsiderable,” he also said.
Albay 2nd District Rep. Joey Salceda on Tuesday said Teodoro’s proposal of full indexation for MUP will add some P1.2 trillion more to the actuarial reserve deficiency or a reserve set aside for future insurance liabilities.
Nevertheless, Salceda said the DND chief’s proposal is “acceptable” but he noted that there could be some “pushback” from the Department of Finance and other economic managers.
But Teodoro pointed out that the projected financial impact of the AFP pension burden is “substantially lower” than expected.