The Duterte administration is considering tapping the Government Service Insurance System (GSIS) to arrest the ballooning pension cost of the soldiers and policemen, Budget Secretary Benjamin E. Diokno said.
On the sidelines of the Financial Executives Institute of the Philippines (FINEX) meeting, Diokno disclosed an impending crisis in the military pension system that the new administration needs to immediately address.
According to Diokno, under the present system, military personnel do not contribute to their own pension fund, instead it is being subsidized by the national government.
“We really need to address that immediately, because otherwise, the problem will continue to balloon. My projection is, the time will come that the amount budget for pension will be about 80 percent of the budget of the military,” Diokno told reporters.
The pension costs of the military are rapidly increasing every year, Diokno pointe out, adding the problem mainly is due to the features present in all existing retirement laws of the military.
To date, pension entitlement of a retiree is automatically adjusted based on the prevailing scale of base pay for similarly ranked active personnel. Their pension is also non-contributory in nature hence budget comes from the annual general appropriations of the government.
According to the latest actuarial study conducted by GSIS, if no reforms are introduced to the existing military pension system, the seed fund shall require an amount equivalent to P5.57 trillion.
However, if reforms are implemented, specifically the deletion of the automatic indexation feature, the formulation of a mandatory contribution and the designation of a minimum pensionable age—then the amount required for the seed fund is significantly lowered to P2 trillion.
However, Diokno said that all existing military members and pensioners will continue to enjoy there benefits, saying the administration’s proposal, once passed into law, would only affect future members.
“The new pension system will apply to the new recruits,” Diokno said. “If they don’t like the new system, then they should not join the service.”
“We really have to find a way to integrate the military pension system to GSIS,” he added.
Diokno also said that the government will infuse additional capital into the state pension fund to accommodate the military servicemen.
“In the past administration, the pension of the military and the police is indexed in the salary of the incumbent. With the Increased salary of the military and police, the pensioners got higher pension,” Diokno said.
“In fact, this time, the pension of the military is much higher than the salaries of incumbents. In the police, it’s almost equal. Next year, we are appropriating something like P80 billion just to pay for the pension of the military,” he added.
http://www.mb.com.ph/govt-may-tap-gsis-to-handle-military-pension/
On the sidelines of the Financial Executives Institute of the Philippines (FINEX) meeting, Diokno disclosed an impending crisis in the military pension system that the new administration needs to immediately address.
According to Diokno, under the present system, military personnel do not contribute to their own pension fund, instead it is being subsidized by the national government.
“We really need to address that immediately, because otherwise, the problem will continue to balloon. My projection is, the time will come that the amount budget for pension will be about 80 percent of the budget of the military,” Diokno told reporters.
The pension costs of the military are rapidly increasing every year, Diokno pointe out, adding the problem mainly is due to the features present in all existing retirement laws of the military.
To date, pension entitlement of a retiree is automatically adjusted based on the prevailing scale of base pay for similarly ranked active personnel. Their pension is also non-contributory in nature hence budget comes from the annual general appropriations of the government.
According to the latest actuarial study conducted by GSIS, if no reforms are introduced to the existing military pension system, the seed fund shall require an amount equivalent to P5.57 trillion.
However, if reforms are implemented, specifically the deletion of the automatic indexation feature, the formulation of a mandatory contribution and the designation of a minimum pensionable age—then the amount required for the seed fund is significantly lowered to P2 trillion.
However, Diokno said that all existing military members and pensioners will continue to enjoy there benefits, saying the administration’s proposal, once passed into law, would only affect future members.
“The new pension system will apply to the new recruits,” Diokno said. “If they don’t like the new system, then they should not join the service.”
“We really have to find a way to integrate the military pension system to GSIS,” he added.
Diokno also said that the government will infuse additional capital into the state pension fund to accommodate the military servicemen.
“In the past administration, the pension of the military and the police is indexed in the salary of the incumbent. With the Increased salary of the military and police, the pensioners got higher pension,” Diokno said.
“In fact, this time, the pension of the military is much higher than the salaries of incumbents. In the police, it’s almost equal. Next year, we are appropriating something like P80 billion just to pay for the pension of the military,” he added.
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