Economic team moves to temper ballooning military, police pension

The economic team will pitch to President Rodrigo Duterte by the end of this month pieces of proposed legislation that will allow the government to temper the ballooning pension benefits of uniformed personnel.

During a Senate finance committee hearing on the proposed P3.757-trillion 2019 national budget on Wednesday, Budget Secretary Benjamin E. Diokno said part of the proposal was to require new recruits to pay contributions.

Separately, Finance Secretary Carlos G. Dominguez III said the package will be presented to the President before this month ends or by early September for his approval.

The economic team wanted the President’s endorsement on legislative measures that will address the fiscal risk, Dominguez said.

“I’m not sure we can save it all, but at least we can start something,” the Finance chief said.

The proposals will be aimed at reducing the P4-trillion requirement to pay the benefits of retired military and police officers in the long term, he said.

Diokno noted that under this year’s budget, they allocated P33 billion for retired uniformed personnel’s pension payouts, on top of the P63 billion for the salaries of those in active service.

For next year, the allocation for pension was a similar P33 billion, while pay, including arrears for those still in service, will reach about P119 billion, Diokno said.

In June, Diokno said the government intended to establish a separate pension fund for uniformed personnel to be administered by the state-run Government Service Insurance System “for efficiency and economy purposes.”

“There will be one—not two—board and administrative machinery handling both funds. Key people—actuary, financial strategists, and managers—are expensive, hard to find, and costly to retain. Clearly, having one set of key officials, rather than two, is the best option,” Diokno explained.

Dominguez said the current pension system for uniformed personnel was “not sustainable over the long run” as well as “already taking a toll” on the country’s fiscal position.

At present, uniformed personnel enjoy indexation of benefits, which means that even when they retire, they still get increases in benefits similar to what active members receive.

During a Cabinet meeting in June, President Duterte ordered the economic team to address the ballooning pension of uniformed personnel.

The government intends to temper this by forming a new pension scheme and entering into joint ventures with the private sector to redevelop military properties.

GSIS president and general manager Jesus Clint O. Aranas had told the Inquirer that the pension fund “supports the proposal, subject to certain conditions and the assurance of a definite source of funding requirements that will be provided to the GSIS, and which shall be separate from the GSIS funds.“

“Our position ever since is that if the GSIS will administer the pension fund of the uniformed personnel, the same should be a separate fund and there should be no commingling of funds—the pension funds for the retirement of uniformed personnel should be kept separate from and independent of the GSIS funds, including the social insurance fund of our members and pensioners,” Aranas had said.   /vvp