The government is planning to utilize some military assets to fund the ballooning pension of uniformed personnel, according to a Cabinet official.
Budget Secretary Benjamin Diokno said the government discovered that the military has pieces of real-state property all over the country that can be sold, leased for the long term or developed through joint ventures.
“For example, we will let developers like Andrew Tan to develop the assets. There is a Marines Fort Bonifacio property. They also have housing property in the area. They can develop that,” he told reporters in an interview.
“They also have pieces of property in the Visayas and Mindanao. Some of them are located in urban areas,” Diokno said.
By utilizing these assets, he added, the government would be able to ensure an annual flow of funds for the military.
“The future flows would fund, in part, the modernization of the Armed Forces and the pension reform,” Diokno said.
The Budget chief, however, added that legislation would be needed for the government to pursue this plan.
Earlier, Diokno said the government will propose this year to Congress a measure that will allow the military pension to be transferred to the Government Service Insurance System (GSIS) during the Duterte administration.
“The transfer will require a law so we are also drafting legislation into that. Before the end of the year [we will propose it to Congress],” he added.
Under the proposal, newly recruited uniformed personnel will be required to contribute to the state-run GSIS.
“That’s the unfortunate part. Right now they are not paying anything for their contribution to the military pension fund. Under the GSIS, they will have to contribute,” Diokno added.
Pensions paid to retired soldiers and policemen are sourced from the national budget, which the Budget department says is not sustainable.
“Based on my recollection, pensions paid every year is about P70 billion to P90 billion. So if we don’t correct this now, the day will come when about 60 percent to 70 percent of the budget of the military will just go to pension,” Diokno said.
“We are going to address this under this administration, otherwise, this will balloon into such a mess that maybe half of our budget will go to the military,” he added.
In a fiscal risk statement for 2017, the Bureau of Treasury said ballooning military pensions were a fiscal risk.
The problem was traced to “features” such as automatic pension adjustments mandated by the military’s retirement rules.