THE Armed Forces of the Philippines-Retirement and Separations Benefits System (AFP-RSBS) is short by P47.291 billion for the retirement and pension benefits of its members, the Commission on Audit said in its report released last Nov. 14.
COA said total assets of the AFP-RSBS as of December 31, 2012 stood at P14.339 billion – far short of its actuarial reserve requirement of P61.63 billion.
“Actuarial reserves are the funds that must be set up to ensure payment of the benefits as and when these fall due. It is also a measure of the System’s fund sufficiency to finance payment of benefits on a continuous basis. An indication of how much resources may be required to fulfill said obligations,” auditors pointed out.
However, with a deficiency of P47.291 billion, COA said the capacity of AFP-RSBS to meet the funding requirements of AFP personnel who are leaving the service and other maturing obligations has been put at risk.
The pension fund started operations in 1976 and was authorized to invest in revenue generating activities including fund management for stock market investments, money market ventures, corporate loans, real estate development and equity holdings in subsidiaries.
COA said rather than set up an actuarial reserve, the Controllership Department instead created its own system of estimating current liability (to be paid during the year) and the non-current portion based on records of contribution earnings.
“To compute for the amount to be set up as membership contributions payable, they get the total disbursements made in the immediate prior year, get the average, then multiplied by 13 months,” auditors said.
However, in the absence of data on how many AFP personnel are due for retirement for the following year, the estimates mostly fall short and adjustments are simply made at anytime during the year.
COA said the poor funding condition of AFP-RSBS was discovered after the Government Service Insurance System (GSIS) submitted the results of its study that it started in 2010 upon the request of the Secretary of National Defense on orders of President Aquino.
GSIS clarified that the computations were based on 2010 figures including survivorship payments and pension benefits.
The study was meant to determine the funding requirement for a proposed legislative measure to be known as “An Act Creating the Philippine Military Pension System, Instituting Reforms in the Retirement Benefits System of the AFP and for other Purposes.”
Other than building up actuarial reserves to ensure continuity of the AFP-RSBS, COA stressed the need for a review of the agency’s investments and asset disposal policies to maximize revenue generation to fund obligations for its members.
Past officials of the AFP-RSBS have been indicted for graft before the Sandiganbayan for alleged fraudulent use of agency’s funds through overpricing of land acquisition in real estate projects in Batangas and Laguna involving billions of pesos.
Many of the said cases are pending in anti-graft court for over a decade.
http://www.malaya.com.ph/business-news/news/p472b-shortage-vets-pension-funds-noted
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