New pension system for soldiers mulled
Finance Secretary Carlos Dominguez III KING RODRIGUEZ/ Presidential Photo
The government plans to put in place a new pension system for uniformed personnel to arrest their ballooning pension benefits, possibly by including them under the coverage of the Government Service Insurance System (GSIS), the pension fund for government employees.
“We are working closely together with the Department of Budget and Management to make sure that the uniformed personnel will have a secure retirement fund of their own. One of the ideas that we’re examining is to include them in the GSIS,” said Finance Secretary Carlos G. Dominguez.
Budget Secretary Benjamin E. Diokno earlier said that the government allocated about P80 billion for military pensioners for 2017.
Dominguez said Defense Secretary Delfin Lorenzana had noted that the cost of retirees’ pension would soon be almost equal to the Department of National Defense’s (DND) operating budget.
The finance chief said the ongoing government study on reforming uniformed personnel’s pension system was expected to be completed within the year.
“This is really quite complex and it requires a lot of work with actuaries. Usually those studies take quite a bit of time as they involve not only the current retirees but also the future ones,” Dominguez explained.
Dominguez said the new pension system for uniformed personnel has to be legislated and would cover future retirees, while keeping the perks being enjoyed by current retirees.
He said the government may have to borrow additional capital for GSIS in case the proposal to also cover uniformed personnel prospers.
According to Dominguez, the DND’s leadership was amenable to a new pension system.
The Cabinet-level interagency Development Budget Coordination Committee (DBCC) has already flagged the ballooning military pension as a fiscal risk.
In 2016, the pension budget amounted to P71 billion. It is projected to reach more than double in eight years to P187.9 billion.
“In view of the foregoing, a reform must be effected for a more sustainable pension system,” the DBCC said.
