Press Release
January 19, 2016

SPONSORSHIP SPEECH: RETIREMENT BENEFITS AND PENSION
OF THE UNIFORMED PERSONNEL

SENATE BILL NO. 3088
COMMITTEE REPORT NO. 353

AN ACT AMENDING PERTINENT LAWS ON THE RETIREMENT BENEFITS AND PENSION OF THE UNIFORMED PERSONNEL OF THE UNIFORMED SERVICES AND PROVIDING FUNDS THEREFOR

Mr. President, Distinguished Colleagues, Ladies & Gentlemen:

Your Committee on National Defense and Security has the honor to sponsor Senate Bill No. 3088, known as the "Unified Uniformed Personnel Retirement Benefits and Pension Reform Act of 2015" under Committee Report No. 353.

Mr. President, Section 7, Article XVI of the 1987 Philippine Constitution states that it is the duty of the state to provide "immediate and adequate care, benefits, and other forms of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans." It is therefore our responsibility to ensure that these retirees continue to receive benefits commensurate to the service they have rendered and that said benefits allow them to live comfortably during retirement.

Existing retirement laws provide for the automatic adjustment of retirement pension based on the prevailing scale of base pay of similarly ranked active personnel. However, said laws are non-contributory in nature, hence, no "seed fund" was established at the time of their enactment, and the budget for the pension comes solely from the annual General Appropriations Act (GAA). This form of budget sourcing eventually led to the ballooning of pension costs, which may no longer be sustained by our meager government resources in the coming years.

Mr. President, it is estimated that by year 2022, the total pension costs of the Armed Forces of the Philippines will eventually surpass the salaries paid to its active personnel. If this condition is allowed to persist, the government will eventually fail to provide adequate retirement pension to the uniformed personnel. Thus, to allow the government to fulfill its duties to the retirees, we are pushing for the passage of this bill that will implement reforms in the country's pension system.

Specifically, this measure seeks to:

  • Standardize the AFP monthly retirement pay equivalent to two and a half percent (2½ %) for each year of active service rendered, but not exceeding ninety percent (90%) of the monthly base and longevity pay of the grade next higher than the permanent grade last held;

  • Rationalize the adjustment of retirement benefits and pension of future retirees by terminating the practice of automatic adjustment of retirees' pension based on the prevailing scale of base pay of active uniformed personnel; and, instead, subjecting their pension to periodic review by the Department of Budget and Management, the Department of Finance, the GSIS, and other concerned agencies to recommend to the President, for his approval, appropriate adjustments thereto;

  • Establish a "seed fund" to be known as the Uniformed Personnel Retirement Fund to be managed by the GSIS; and

  • Deactivate the AFP Retirement and Separation Benefits System (AFP-RSBS) to formulate a mandatory contributory scheme.

Mr. President, only the new entrants or the new recruits upon the passage of this measure will be covered by this proposal; meaning, the existing retirees and even those who are currently in active service will not be affected by this bill, and, hence, will still be covered by the current retirement laws.

Passing this measure is the least we can do to honor the sacrifices of our heroes and to recognize their unwavering fidelity and their life of service to the country, while we take into consideration the government resources' capacity to support their needs. By providing a secure, reliable, sustainable and economically viable retirement benefit and pension system, we fulfill the socio-economic mandate of our government to improve the lives of our veterans and retirees.

In view of the foregoing, it is the hope of your Committee that this August chamber will immediately and favorably act upon this measure.

Thank you, Mr. President.

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