The decision of the Aquino administration to abolish the pension fund for the members of the Armed Forces of the Philippines (AFP) is a major policy decision by the government that needs fuller explanation than the two-page news release issued to the media.
This event will come to pass if Memorandum Order 90, as signed by Executive Seretary Paquito Ochoa and presumably approved by President Benigno BS Aquino 3rd, is fully implemented.
Needed: a convincing explanation
We believe the government must provide a convincing brief on the matter because the Armed Forces of the Philippines-Retirement and Separation Benefits System (AFP-RSBS) carries a responsibility that is of far-reaching importance to the nation. It was tasked by law to establish an effective and sound social security system for the officers and members of the nation‘s armed forces, of which there are an estimated 125,000 active members.
As sketchily explained in the press release and in news stories, the Palace has ordered the abolition of the AFP-RSBS because the financial institution is cash-strapped and abolition is a measure to curb inefficient public spending.
Memorandum Order 90 says the interest liability of AFP-RSBS continues to grow and this government-owned and/or -controlled corporation (GOCC) now faces a depletion of its retained earnings by the end of November.
The memorandum noted that the pension and benefits of retired AFP personnel continue to be funded through the General Appropriations Act (GAA). The GCG (Governance Commission for GOCCs) has recommended its abolition because this is in the best interest of the state.
Aquino government gives up on fund
The announcement provided no explanation whatever as to why the AFP pension fund has become cash-strapped and how its management has failed miserably in its mission.
It merely implied that the current government has given up on the fund because it does not have the expertise and knowhow to make it work. In so many words, it implied that killing the pension fund makes more sense than maintaining it.
We are not satisfied by such a bland explanation. There is more to this story than is being told to the public. The issue involves a matter that is of far-reaching importance to the nation.
Consider this. When we speak of the Armed Froces of the Philippines, we are talking of all our armed services: the Philippine Army, the Philippine Navy, the Philippine Air Force and the Philippine Marine Corps.
Equally important to consider also are these salient acts:
1. The nation has budgeted in the 2016 General Appropriations Act P175.2 billion ($3.8 billion) for the salaries, maintenance and operations of our armed forces.
2. The AFP Modernization program that is now underway will
cost $22.9 billion by the time it is completed in 2028.
AFP pension system, a national obligation
It is important to stress these facts and figures because they indicate how important the armed forces are to our people and our country.
Maintaining a sound retirement system for our men in uniform should be a national obligation, not a discretionary policy.
As things stand now, government policies are helter-skelter.
The government shoulders multiple pension packages for the military and other uniformed personnel. Unlike other civil servants, military and uniformed personnel do not contribute premiums to a pension fund, which leads us to ask, why not?
The incumbent RSBS president and chief executive officer says the fund still has sufficient funds and assets at its disposal to cover payments to refund soldier members within three to four years period following its deactivation.
The book value of RSBS now is P16 billion, compared to its liabilities of P12 billion.
To conclude our point here, the Filipino public, and not least our men in uniform, needs a full report on why the AFP pension fund has not worked, who are responsible for the failure, and why the pension systems for civil service employees and private sector employees are comparatively sound and working.
If we can do it for civilian and private sector employees, why can’t we do the same for our men in uniform?