'Civilians should run new AFP pension body'

MANILA, Philippines - A new pension body that will replace the military’s Retirement and Separation Benefits System should be managed by civilian financial experts rather than soldiers to ensure that its funds are handled efficiently, an RSBS official said yesterday.

RSBS president Emilio Marayag said this is one of the reforms they are proposing to ensure that funds are managed properly and to avoid the lapses committed by previous handlers of the retirement system.

“Civilians can better manage the retirement system. That’s not the job of the military,” Marayag said in a phone interview.

The RSBS is currently managed by a nine-man board of trustees, with the Armed Forces of the Philippines (AFP) chief as the chairman.

The RSBS board – which has the authority to endorse the appointment of its own officials – has representatives from the major services, enlisted personnel, and retired soldiers. Some critics claim that the system allowed the appointment of retired officers who are not competent enough to manage investments.

The RSBS has completed its draft bill proposing reforms in the retirement scheme to reduce the government’s pension arrears.

“If we fail to implement these reforms, 29 years from now or in 2040, our pension (obligations) to soldiers would reach P1 trillion and the government may not be able to shoulder it,” Marayag said. He said their proposal will limit the number of military representatives to the board to two, including the AFP chief.

“The structure of the board would be changed. We would recommend just two military representatives. The rest would come from the civilian sector or experts in financial and investment management,” he told radio station dzBB yesterday. Marayag believes the setup would allow soldiers to focus on their core competencies.

He said the members of the RSBS board should be appointed by President Aquino and not by officials of the retirement body. The defense secretary would serve as the chairman of the board while the AFP chief would remain as a member, Marayag said.

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 collected five percent of a soldier’s basic monthly pay and ensured a six-percent return upon retirement plus pension benefits.

In 2006, the RSBS announced that it is losing money as its funds were invested in low-return real estate projects and loans. Some sectors accused the officials of RSBS, some of them retired military officers, of mismanaging the retirement body.

RSBS, which was intended to be self-sufficient, currently subsists solely on the contributions of its members.

The draft bill calls for the deactivation of RSBS in three years to be replaced by a state-run firm called Philippine Military Pension System.

The proposal also scraps a provision of the retirement law that raises the benefits of retirees whenever the salaries of active soldiers are upgraded. 

Marayag said such reforms would enable the government to save about P1 billion a year since it would hold-off annual pension increases.

The government owes around P16 billion to about 112,000 military pensioners.

Earlier this month, the Sandiganbayan convicted retired brigadier general Jose Ramiscal, who used to head the RSBS, and three other officials of graft for the RSBS’ purchase of overpriced property. They were sentenced to 10 years in jail and ordered to pay the RSBS P1.3 million. Ramiscal was also found guilty of falsification of public documents for the transaction, for which he was sentenced to another two to six years’ imprisonment and fined P5,000.