To return retirement contribution
THE Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) is shutting down soon but has assured the country’s military personnel that their respective contributions will be refunded to them over the next three years beginning next year.
Norman Legaspi, RSBS president and chief executive officer, told The Manila Times on Wednesday that they have recently submitted their proposed liquidation and deactivation plan to the Governance Commission for Government-Owned and -Controlled Corporations (GCG).
GCG acts as the oversight body with authority to formulate, implement and coordinate policies governing government-owned and -controlled corporations (GOCCs), including the rehabilitation or deactivation of non-performing and cash-strapped GOCCs.
“Our proposed liquidation plan includes our ultimate objective, which is to return the money of our military personnel starting early next year to 2019,” Legaspi said.
The RSBS chief said that its board intends to accelerate the refund process since any unnecessary delay might further deplete their retained earnings.
RSBS was created pursuant to Presidential Decree 361 in 1973, and was aimed at providing the AFP personnel their own independent and self-sufficient pension fund. It only had a seed money of P200 million.
In December 2006, however, then President Gloria Macapagal-Arroyo issued Executive Order 590 deactivating the retirement system. Yet, RSBS still continues to operate at present because it has yet to wind up its affairs.
RSBS receives an average contribution of P110 million a month, or about 5 percent of every soldier’s monthly salary. The AFP automatically withholds such payments and it, in turn, remits the money to RSBS.
The AFP has 116,000 active military personnel.
Every year, RSBS pays about P200 million in retirement and separation benefits to some 2,000 to 3,000 retiring soldiers, or an average payment of P200,000 per retiree.
RSBS is giving such lump sum on top of the pension and retirement benefits being enjoyed by the retiring AFP personnel, the latter being funded under the General Appropriations Act.
“We have never defaulted in terms of refunding these contributions to our retiring soldiers. But we have to accelerate the payment not only to the retirees but also to those in the active service so that no one will be left empty-handed. We have the money, we just have to liquidate some assets to reimburse everyone,” Legaspi said.
The RSBS chief said that as early as 2013, its board had already sought the stoppage of the withholding of the monthly contribution from soldiers’ salaries so as to limit the funds that would be paid back to soldiers anyway.
“Right now we are still receiving 5 percent of their [soldiers]salaries. Our mandate includes the return of each soldier’s contribution with 6 percent interest [per year of contribution]upon their retirement,” Legaspi said.
“It is the 6 percent interest per year of contribution that makes us [RSBS] not sustainable,” he added.
He explained that the RSBS cannot attain its objective–to be self-sufficient–without any financial support from the national government.
“Our hands are tied in terms of growing the money. We are only allowed to invest in government-issued securities and money markets. These kinds of investments, although very safe would merely grow the fund by 1.5 percent a year, while we are to return each retiring soldier’s contribution with 6 percent interest [per year of contribution]. This among others will prevent RSBS from attaining its self-sufficient status,” he said.
RSBS’ liabilities, or the amount which shall be returned to the country’s military personnel, stand at P12 billion, while its assets are valued at P15 billion.
“These are mainly real properties as the agency heavily invested on real estate projects and developments during the 1990s. But of the P15 billion, we have P6 billion retained earnings,” he said.
These real estate projects include the 500-hectare Riviera Estates and Golf and Country Club in Silang, Cavite; the three-hectare land of Aseana Property along Macapagal Avenue; and the 172-hectare Green Meadows property in Iloilo. RSBS is also a part-owner of the popular theme park Enchanted Kingdom in Laguna.
Legaspi said that the board has proposed that the RSBS assets be sold through public auctions.
“We are already receiving queries for these properties, and many have expressed their interest to participate in the bidding,” he said.
Legaspi stressed that all military personnel have nothing to worry about.
“We would like to assure all our soldiers that we will refund their contributions in the next three years starting next year. This three-year period is the time we need to liquidate our non-performing assets and wind up our affairs,” Legaspi said.