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Should AFP adopt new pension scheme?

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First of all, let me greet Sen. Antonio “Sonny” Trillanes on his 40th birthday, his first as an elected senator enjoying fully the freedom that was denied him for seven long years by the previous administration. In an unprecedented act of betrayal, the Arroyo government charged him in a civilian court although the terms of surrender called for military justice under the Articles of War.

As I mentioned in a column last year, Ninoy Aquino spent seven years and seven months in prison. Sonny Trillanes spent seven years and six months in a Camp Crame detention cell. Two elected senators, both spending about the same time in prison; one assassinated at the Naia, the other gearing up for reelection in 2013.

Sonny Trillanes was elected to the Senate in 2007, just two months short of his 36th birthday. He was chosen by the people while in detention, unable to move around freely in order to campaign like other candidates, and working with very limited resources. Yet he won with more than 11 million votes, coming in at No. 11 in the senatorial victory lineup, besting administration giants like Mike Defensor, Ralph Recto, Prospero Pichay, and Miguel Zubiri, who placed No. 12. (Zubiri resigned his Senate seat last week.)

* * *

In 1973, Presidential Decree 361 created the Armed Forces Retirement and Separation Benefits System (AFP RSBS). Among its pertinent provisions were the following:

Initial funding (seed money) of P200 million in four equal annual payments starting in July 1974

AFP personnel to contribute 4 percent of monthly base and longevity pay

Contributions plus 4 percent interest refunded to those not eligible for retirement benefits

Retirement benefits would be paid from appropriations, but after four years the system would shoulder requirements in excess of P100 million

Funding for RSBS to come from appropriations and contributions, donations, gifts, and other earnings of the system

System to be administered by the AFP chief of staff

What was the purpose of the RSBS?

The RSBS was set up as a funding mechanism to guarantee continuous financial support for the military retirement system. The system upon attaining self-sufficiency would take over from the national government the payment of retirement/separation benefits of AFP personnel.

Why did the RSBS fail to attain self-sufficiency and assume payment of military pensions, which was the rationale for its creation?

The drumbeaters for a new pension scheme, to be known as the Philippine Military Pension System (PMPS), argue that the original RSBS was bound to fail because of several flaws in its charter: (By the way, the acronym makes it sound like a woman’s condition of discomfort—Pre-Menstrual Position Syndrome. I can almost see media going to town on this one.)

Actual funding was inadequate—government seed money of P200 million was given in five tranches starting in 1976 and spread over a four-year period. But as early as 1970, the funding requirement was already P712 million. From the very start, the system was underfunded.

Structural flaws—employer-employee contribution rate of RSBS was 5 percent coming only from the member without any government share. In the case of GSIS and SSS, contribution rates were 21 percent and 10.4 percent, respectively, without any refund. Contributions came from both employer and employee.

The bright boys who came up with the RSBS charter obviously did not do their homework. Otherwise they would have discovered these flaws without too much effort. But that is what happens when people are gung-ho on a project for reasons of their own. The focus is on getting things started right away, believing that substantial issues can be addressed later and usually done by throwing more money down the drain.

The drumbeaters also warn that due to ballooning pension costs, there are signals that the government may be unable to continue paying pensions. They cite pension arrears of more than P15 billion. I would characterize these as scare tactics to get people on the bandwagon. We all know that any attempt to decrease pensions is a surefire formula for unrest in the military. Any sacrifices that need to be made must be shouldered by all sectors of society—the pork barrel of legislators, the excessive pay and allowances of executives of government corporations, the conditional cash transfers, and other similar government programs.

What is the status of the RSBS today?

Reports say that as of December 2010, RSBS remains stable with total assets of P12.6 billion as against liabilities of only P3.6 billion. Net income as of last year amounted to P108.6 million coming from real estate, marketable securities, lending, industrial park leases, and others.

One must take a close look at these figures. Accounting procedures differ from one agency to another. Smart accountants can make any company smell like roses for public consumption.

From a high of 203 regular employees in 2005, the manpower complement is now down to 85.

One last word. Any new pension scheme must also deal with the scandals of the past.

To the Filipino taxpayer, the RSBS is a reminder of the abuse of some military officers who took advantage of their position for personal profit and gain. Rightly or wrongly, the average citizen believes that RSBS failed not because of underfunding or structural flaws —although this may have been contributory—but more because of greedy hands and minds bent on advancing their own agenda to the detriment of the institution.

The reputation of the military organization has suffered tremendously in recent months. We must be careful lest we repeat the mistakes of the past.

There are all kinds of proposals to improve on RSBS. As with all programs, much depends on the individuals tasked to carry out any new initiatives. We must be prepared to reach outside of military circles to ensure that old boy networks do not dominate and interfere with the proper administration of the System.


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Tags: 40th birthday , Armed Forces Retirement and Separation Benefits System (AFP RSBS) , military pension , Sen. Antonio “Sonny” Trillanes , Sen. Benigno “Ninoy” Aquino Jr. , taxpayer

  • Anonymous

    Those generals can twist and tweak everything. They can butingting everything.

  • Anonymous

    while a review of RSBS and eventually restructuring of the organization is ongoing, meanwhile retirees are anxiously waiting for the payment of pension arrears since 2 yrs ago.  DND/AFP must act with dispatch on this issue with fairness and equity! The families of retirees and pensioners have been waiting for the release of their fair share on their monthly pension. On two occasions, news releases reported . . ” DBM P8.6B in DND funds – savings  total personnel services allotment”- Feb 1, 2011 Phil defense Forum ; Phil Star – AFP posts savings of P565M in 2010. Budget Sec Florencio Abad said some P8.6B for military personnel services have been withheld.
    WHAT HAPPENED? Paging Cong Biazon, Sen Honasan, Sen Trillanes, Sen Lacson, pls help us!  

  • http://pulse.yahoo.com/_OHOD5EA75DBBUH53UKLRXRK764 Mang Teban

    Please don’t compare Trillanes with Ninoy. Are you his campaign manager?

  • Anonymous

    Trillanes is no Ninoy. Trillanes lived by the gun but refused to die by the gun, he surrendered/coward. Ninoy was willing to die for his principles and he did. Ninoy was jailed because of his principled stand as Trillanes because he started a coup  – this columinst does not seemed to understand the difference. Ninoy died a Hero, Trillanes only accomplishment is getting himself elected with his mistresses – Gringo and Lacson. and I would not be too proud with 11m votes – look at Sen. Lapid, Estrada, Marcos etc. It just goes to show that there are that many gullible voters. Ninoy is one in a 90 million while Trillanes, well the PMA makes lots of them - defective, frustrated, gun-powdered brained, messiah wannabe, failure prone drones.

  • Anonymous

    Trillanes is a Gringo copy-cat. Just what we need another seat warmer in the Senate.

  • http://pulse.yahoo.com/_E7SFPQFWHHEAJ4IZKPD7OYJXVM Jabba

    test

  • http://www.facebook.com/people/Brando-Pascual/100002132017262 Brando Pascual

    It is unfair for soldiers to have reduced retirement benefits.  Increase their retirement age, yes. But not to promote them one-rank higher upon their retirement from which their retirement benefits and pension are based, it will be unfair and unjust. If government is not capable of improving the lives of the people, soldiers included, it should at least maintain what are for them at present.  It is so because people aspire always to have better life. And the government has responsibility for this.

  • Anonymous

    Are the soldiers not gsis members?  In my understanding,rsbs actuarials is poorly done and  there was some mismanagement of the funds before.  Poor soldiers!  Indeed there is a need to do some policy changes and augmentation of funds.  No wonder the pabaon system among ther higher ups of the military existed.  But the sad thing about it was that the their is no pabaon among the lower ranks.

  • http://www.facebook.com/antoniogloria.sabanto Antonio Gloria Sabanto

    the right thing that the afp should do is to review the retirement system service which is 30 years only and not to promote a master sergeant to the next two higher grade while in the service because master sergeant is the highest rank of the enlisted personnel in the afp it is very unfair and it is one way to save the fund and others may enjoy. there were 9 months for every year pension differentials during the arroyo administration since 2001 that retirees have not received as of this present date. question; is there a hope that said claim be release? for the information, many of the pensioners are suffering financially.   

  • http://www.facebook.com/antoniogloria.sabanto Antonio Gloria Sabanto

    refer to section 2 pd no. 1650 dated 8 Nov 1979



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