Use RSBS funds for pension woes, Teodoro urges Congress

Gilbert “Gibo” Teodoro Jr. —Senate PRIB

Defense Secretary Gilberto “Gibo” Teodoro Jr. on Wednesday asked Congress to pass a law abolishing a graft-plagued state agency that used to handle the pension system of the members of the Armed Forces of the Philippines.

Facing the congressional Commission on Appointments for his confirmation hearing, Teodoro said a law was needed to dissolve the AFP Retirement and Separation Benefits System (RSBS) since it was created by a presidential decree in 1973.

He noted that the operations of the military pension body were terminated in 2016 only through a memorandum order which was signed by then President Benigno Aquino III.

By abolishing it, he said the government would be able to sell the properties and other assets of RSBS worth billions of pesos, and use the proceeds of the sale as seed money for the proposed pension fund for the military and other uniformed personnel (MUP).

“We recognize that we need fiscal prudence. That’s why we are hoping that the RSBS will be dissolved by law so that its assets will be placed in the AFP retirement trust fund,” Teodoro said in response to a question by Sen. Risa Hontiveros.

The defense secretary, whose appointment was unanimously approved by the 25-member congressional body, also proposed to funnel the AFP’s shares from the profits of the Bases Conversion and Development Authority to the MUP fund.

In addition, he said they requested the Department of Environment and Natural Resources to help them process the titles of lands owned by the AFP and the Department of National Defense to help them raise additional funds.

“We know that these funds would take time to mature. But when it does, there would be a separate trust fund to finance the retirement pay [of soldiers] that will not be subject to the financial position of the government,” Teodoro said.‘Managerial solutions’

Hontiveros commended Teodoro for advocating “managerial solutions, not military solutions, to managerial problems.”

“The good thing is if we can pull it off, with Congress’ policy support, then the executive (branch) will also be able to achieve our other national interests, including our country’s national defense and military interests,” Hontiveros said.

Unlike the Government Service Insurance System and the Social Security System, whose members pay a portion of their retirement fund, the current MUP pension system is fully funded by taxpayers.

Since the pension amount is pegged to the current monthly pay of personnel in active service, payments to retiring personnel increased substantially when then President Rodrigo Duterte doubled the salaries of the armed services in 2018.

National Treasurer Rosalia de Leon had earlier said that the funding required to pay for MUP pensions has been growing at a “fiscally unsustainable rate,” with the unfunded liabilities already estimated at P9.6 trillion as of 2020.

READ: ‘Shared sacrifice’ underpins MUP pension bill, says lawmaker