Teodoro: Pension burden of AFP retirees on gov't expenditures will reduce over time

Defense Secretary Gilberto “Gibo” Teodoro Jr. on Wednesday said the burden on the government expenditures due to the pension of Armed Forces of the Philippines (AFP) retirees will reduce over time.

In a statement, Teodoro pointed out several factors for the lawmakers to consider as they reform the pension system for military and uniformed personnel (MUP).

“The pension burden of the AFP retirees on government expenditures will actually reduce over time as the envisioned AFP Retirement trust fund becomes viable as a funding source given a constant force size,” he said.

“Also, it is proposed that the share in the BCDA earnings of the AFP and other DND related GOCCs be realigned to service AFP retiree pensions,” he added.

Teodoro said the AFP will not boost the size of its force in the same manner as other uniformed services, whose numbers are being adjusted depending on the country’s growing population.

Aside from this, Teodoro added that his department was informed that the financial impact of the pension burden of the AFP retirees, now and in the future, is “substantially lower than as originally stated”.

“We likewise have no intention of downplaying the significant contributions of all sectors of our society in nation building and making our country resilient. But the undeniable fact is that all these collective efforts will fail if we do not have a strong, well equipped and, most importantly--a well motivated and professional AFP,” he said.

“The Department hopes that our lawmakers will take these factors into consideration and help us ensure the welfare of our soldiers and their families,” he added.

On Tuesday, House ways and means panel chairperson Joey Salceda said Teodoro's proposal to allow full indexation would mean additional P1.2 trillion expenses for the government.

Teodoro earlier proposed the full indexation of the MUP pension corresponding to personnel's rank upon retirement.

On Wednesday, Finance Secretary Benjamin Diokno stood firm on removing the indexation from the MUP pension system as part of proposed reforms to address fiscal implications stemming from its current setup.

“It will not qualify as a reform if indexation will continue and the active members will not contribute. We have to reduce the fiscal impact of the MUP’s pension program and the contribution of active members will greatly help in managing that,” Diokno said in a statement.

Military and uniformed personnel currently do not make contributions to their pension fund, which is fully funded by the government under the national budget.

Under the current system, retired MUPs' pensions are automatically indexed to the prevailing salary of incumbent personnel of similar rank. —Joviland Rita/ VAL, GMA Integrated News