Defense eyeing to amend pension benefit law

From Business World (Aug 4): Defense eyeing to amend pension benefit law

THE DEFENSE department is studying changes to the military pension law to address a looming budget crisis in funding the salary of active personnel and retiree benefits.

“The proposal to remove the indexation [in the retirement benefit system] is under study... Things are being ironed out and all these inputs are being studied,” Defense Director and spokesperson Peter G. Galvez said in a phone interview.

The response was a follow-up to a radio interview last week whereby Defense Secretary Voltaire T. Gazmin said scrapping the law on indexing pension benefits to the pay of active personnel will address concerns that pension costs will eventually overtake the budget for salaries.

“The retirees’ pension is indexed with the salary of the active [personnel]... This means that when the salary of the active increases, the pension benefits will also increase. The pension will continue to balloon,” Mr. Gazmin explained.

“By 2018 or 2019, the pension requirement will be bigger than the active soldiers’ salaries and that will be a problem.”

An interagency move is being conducted to study the proposal.

“The proposal is being studied by the Department of Budget and Management, Department of Finance, and Government Service Insurance System (GSIS),” Mr. Gazmin added.

The indexation scheme is provided under Presidential Decree 1638 or the AFP (Armed Forces of the Philippines) Retirement Law of 1979.

Meanwhile, Gen. Raul S. Urgello (retired), former chief of the Intelligence Service of the Philippines, said in a separate radio interview that the Department of National Defense should study the proposal carefully and find an alternative solution.

“That is a very simplified approach. Only active soldiers will be affected. We [retirees] will not be affected by the proposed reform because you cannot pass a law that is retroactive...,” Mr. Urgello said.

He added that “one of the unintended consequences” of the proposal to remove the indexation scheme is the probable mass retirement of soldiers who are still in active service.

According to the Armed Forces of the Philippines Pension and Gratuity Management Center statement last Thursday, total pensioners on the July 2013 payroll numbered 122,472.

A total of 12,203 out of the 15,775 pensioners with incomplete data documents have been revalidated to be restored in the pension payroll as of July 19.

“If you will compare the number of retirees of GSIS and SSS (Social Security System) which both runs to millions, we are a small group... I hope they heed to our requests because it will have an effect on the morale and welfare of our soldiers,” Mr. Urgello said.

http://www.bworldonline.com/content.php?section=Nation&title=Defense-eyeing-to-amend-pension-benefit-law&id=74423