Government allots P60 billion for pension of retired military personnel

MANILA, Philippines - The government has allotted close to P60 billion for the pension of retired military personnel in the past four years after Malacañang deactivated the Retirement and Separation Benefits System (RSBS) in 2006.

Data obtained by The STAR showed that the pension outlay allotted for retirees stood at P10.886 billion in 2007, P13.292 billion in 2008 and P15.776 billion in 2009. For this year, the funding for the pension of retired soldiers reached P19.384 billion.

The total budget for soldiers’ pension from 2007 to 2010 is P59.338 billion, which means that taxpayers have been shouldering the pension of retired military personnel due to the failure of RSBS to become self-sufficient.

Malacañang has proposed a P24.11-billion fund for retired soldiers’ pension requirements for next year.

The proposal came amid efforts by the government to cut expenses due to a huge budget deficit, which is expected to hit P325 billion this year and P290 billion in 2011.

Sought for comment, Armed Forces of the Philippines (AFP) Finance Center chief Col. Rolando Picar said there are now efforts to come up with a better retirement and benefits system.

Picar said good management and a prudent investment policy would ensure that the new retirement system would be viable and not burden state coffers.

“There should be improved management. Perhaps we should enhance the systems and correct those that are not working,” Picar said.

“We want (the retirement system) to be self-sustaining so it would not become a burden to the government,” he added. 

The RSBS was formed in 1973 by the late strongman Ferdinand Marcos to serve as a funding scheme for the payment of retirement and separation benefits to military personnel. The payments are funded by deductions from soldiers’ salary.  

The pension fund used to collect five percent of a soldier’s basic monthly pay and ensured a six percent return upon retirement plus pension benefits.

In October 2006, the AFP announced the RSBS was losing money as its funds were invested in low-return real estate projects and loans. Two months later, then President Gloria Macapagal-Arroyo issued Executive Order 590 that deactivated the retirement system.

Some sectors accused the RSBS board, composed of military generals, of mismanaging the agency’s funds.

Since then, the government has been shouldering the payment of benefits of retired military personnel.

Picar cited the need for measures to ensure that the new retirement system would have enough funds. He said soldiers should not get back the money deducted from their salaries so the new retirement system can sustain its operations.

“If we are prudent in our investments, then the money will grow. There will come a time it (system) would be self-sustaining. For now, it is very difficult to attain (that) level if you put your money in it and eventually get it back,” Picar said.

He said retired personnel should just get pensions and the deductions from their salaries should be treated as their contribution to the system’s funds.

The Department of National Defense (DND) earlier ordered the conduct of studies for a new retirement and benefit system in the wake of concerns that the state may be spending too much for the pension of retired soldiers and policemen.

The DND said the study aims to eventually “relieve the national government from supporting military retirement benefits.”

“The possibility of an integrated retirement benefit system which will support the pension and other retirement benefits of all uniformed service personnel will also be studied,” the DND said.