EIGHTEENTH CONGRESS OF THE +)

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
4534
H.B. No.

Introduced by Rep. Vilma Santos-Recto
6th District of Batangas

AN ACT
STRENGTHENING THE MILITARY AND UNIFORMED PERSONNEL PENSION
SYSTEM, CREATING THE MILITARY AND UNIFORMED PERSONNEL
INSURANCE FUND, AMENDING SECTIONS 3 AND 24 OF REPUBLIC ACT
NUMBER 8291, AND FOR OTHER PURPOSES,

EXPLANATORY NOTE

Uniformed services are vested with the Aegean tasks of upholding Philippine
sovereignty and territorial integrity, protecting lives and properties, and maintaining peace,
order, and safety. To perform their respective mandates, uniformed services engage in the
active recruitment of their respective manpower complement. Such recruitment of military
men, police officers, firefighters, jail custodians, and coastguardsmen, will invariably result
not only in increased operational cost today, but also in higher pension payments in the

future.

‘The current system of financing the pension requirements of military and uniformed
personnel retirees, however, is unsustainable, if not fiscally irresponsible. The pension system
is entirely dependent on the funds appropriated for pension requirements in the annual
general appropriations. Apart from the resulting delays in the payment of pension claims, the
government is also burdened by the need to appropriate funds for a ballooning pension
requirement without a viable fund source. For 2017, the government has obligated P75.17
billion, or 2.27% of total obligations', for military and uniformed personnel pension — an
amount equivalent to 230.69% of the amount obligated for the same purpose just a decade

* department of Budget and Management (2018). Budget of Expenditures ond Sources of Financing FY 2019. Manila: Department of Budget and
Management


ago*. This figure is almost equal to the P79.58 billion obligated for military and uniformed
personnel base pay for the same year. Without ample intervention, funding requirements for
pensioners shall eclipse the operational requirements of all active uniformed services in the

country in a few years.

This bill seeks to arrest this impending fiscal disaster by establishing a government-
guaranteed insurance fund to cover the insurance needs of new entrants to the uniformed
services of the government. This fund shall be managed by the Government Service
Insurance System (GSIS) and shall be supported by agency contributions equivalent to 21%
of the total monthly base pay of their respective uniformed personnel. Proceeds from
investing the fund shall then be used to pay for the separation or retirement benefits of
qualified uniformed personnel member. This bill also ensures that existing pensioners and
uniformed personnel in active service prior to its approval shall enjoy the prevailing
retirement benefits at the time of their initial appointment, recruitment, or admission to the

uniformed services.

Through the creation of the Military and Uniformed Personnel (MUP) Insurance
Fund, it is hoped that a viable and sustainable funding source for pension requirements shall
be secured, and a responsible management of scant government resources shall be realized.

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In view of the foregoing, the swift passage of t

* Department of Budget and Management (2008). Budget of Expenditures and Sources of Financing FY 2009, Manila: Department of Budget and
Management


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EIGHTEENTH CONGRESS OF THE. )

REPUBLIC OF THE PHILIPPINES )
First Regular Session )
HOUSE OF REPRESENTATIVES
H. B. No. 4534

Introduced by Rep. Vilma Santos-Recto
6th District of Batangas

AN ACT
STRENGTHENING THE MILITARY AND UNIFORMED PERSONNEL PENSION
SYSTEM, CREATING THE MILITARY AND UNIFORMED PERSONNEL
INSURANCE FUND, AMENDING SECTIONS 3 AND 24 OF REPUBLIC ACT
NUMBER 8291, AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

Section 1. Short Title. — This Act shall be known as the “Military and Uniformed
Personnel Insurance Fund Act.”

Sec. 2. Declaration of Policy and Objectives. ~The State recognizes the invaluable

contribution of the uniformed services in provi an environment conducive to nation-

building and economic development. The State likewise recognizes the role of uniformed
personnel who faithfully carry out their mandate to uphold Philippine sovereignty and
territorial integrity; to protect lives and properties; and to maintain peace, order, and safety —
often at great personal risk and peril. To recompense such dedicated performance of duty, it
is hereby declared the policy of the State to provide immediate and adequate care, benefits,
and other forms of assistance to veterans of the uniformed services, as well as to their
surviving spouses and orphans. Towards this end, the State shall develop a sound, viable, and
tax-exempt military and uniformed personnel insurance and pension fund that caters to the
needs of the uniformed personnel of the National Government, and motivates them to
faithfully abide by their commitments to the country and its people.


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Sec. 3. Definition of Terms. ~ For the purposes of this Act:

(a) Military and Uniformed Personnel (MUP) Insurance Fund shall refer to the
special insurance fund for the new entrants to the uniformed services of the National
Government created under Section 4 of this Act;

(b) Base Pay shall refer to the primary cash compensation for work performed by
uniformed personnel of the uniformed services, excluding any other pay, allowances, benefits
or incentives;

(©) Government Service Insurance System (GSIS) shall refer to the Government
Service Insurance System created by Commonwealth Act No. 186, as amended;

(d) New Entrants shall refer to newly-appointed, -recruited or -admitted uniformed
personnel of the uniformed services after the effectivity of this Act;

(©) Uniformed Personnel shall refer to the commissioned officers and enlisted
personnel of the uniformed services; and,

() Uniformed Services shall refer to the Armed Forces of the Philippines (AFP),
Philippine National Police (PNP), Bureau of Fire Protection (BFP), Bureau of Jail
Management and Penology (BJMP), Philippine Coast Guard (PCG) and commissioned corps
of the National Mapping and Resource Information Authority (NAMRIA).

Sec. 4. Military and Uniformed Personnel Insurance Fund. - To carry out the
purposes of this Act, the Military and Uniformed Personnel Insurance Fund is hereby created,
herein referred to as the MUP Insurance Fund, as a special insurance fund for the new

entrants to the uniformed services who received th
of this Act.

The GSIS shall be responsible for the administration of the MUP Insurance Fund and
the implementation of the provisions of this Act: Provided, That the MUP Insurance Fund
shall be administered and reported separately from the GSIS Social Insurance Fund provided
under Section 34 of Republic Act No. 8291, otherwise known as “The Government Service
Insurance System Act of 1997.”

‘The MUP Insurance Fund shall not be used for purposes other than those provided for

initial appointments after the effectivity

under this Act. No portion of the MUP Insurance Fund or income thereof shall accrue to the
General Fund of the national government and its political subdivisions, instrumentalities and
other agencies including government-owned and controlled corporations except as may be
allowed under this Act.

Sec. 5. Coverage. ~ Upon recruitment, appointment or admission, coverage in the
MUP Insurance Fund shall be mandatory for all new entrants to the uniformed services.


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Sec. 6. Section 3 of Republic Act No. 8291, otherwise known as “The Government
Service Insurance System Act of 1997,” is hereby amended to read as follows:
“Section 3. Compulsory Membership. — Membership in the GSIS
shall be compulsory for all employees receiving compensation AND FOR
NEW ENTRANTS TO THE UNIFORMED SERVICES COVERED BY
THE MUP INSURANCE FUND, who have not reached the compulsory
retirement age, irrespective of employment status, except [members-of the
GSIS,and] contractuals who have no employer and employee relationship
with the agencies they serve.”
SEC. 7. Section 24 of Republic Act No. 8291, otherwise known as “The Government
Service Insurance System Act of 1997,” is hereby amended to read as follows:
“Section 24, Compulsory Life Insurance. — All employees [exeept-for
National Police (PNP)] AND NEW ENTRANTS TO THE UNIFORMED
SERVICES COVERED BY THE MUP INSURANCE FUND shall, under
such terms and conditions as may be promulgated by the GSIS, be

compulsorily covered with life insurance, which shall automatically take effect

as follows:

Sec. 8. MUP Insurance Fund Generation. — ‘The government agency concerned shall
contribute to the MUP Insurance Fund an amount equivalent to twenty-one percent (21%) of
the monthly base pay of their uniformed personnel appointed after the effectivity of this Act.

‘The government agency concerned shall include in its annual appropriation such sums
as may be necessary to cover the required contribution provided for in this Act. The manner
of collection and remittance of contributions to the MUP Insurance Fund shall be in
accordance with the relevant provisions of Republic Act No. 8291, otherwise known as “The
Government Service Insurance System Act of 1997.”

Sec. 9. MUP Insurance Fund Investments. ~ The portions of the MUP Insurance Fund
which are not needed to meet any current obligation may be invested in accordance with
Section 36 of Republic Act No. 8291, otherwise known as “The Government Service
Insurance System Act of 1997.”



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Sec. 10. Retirement, Separation and Other Benefits. — The provision of retirement,
separation, and other benefits chargeable against the MUP Insurance Fund, including
eligibility requirements, shall be governed by the relevant provisions of Republic Act No.
8291, otherwise known as “The Government Service Insurance System Act of 1997.”

Sec. 11. Grant of Additional Retirement and Separation Benefits. - GSIS may, upon
determination of actuarial soundness, provide better pension benefits to qualified military and
uniformed personnel retirees covered by the MUP Insurance Fund.

Sec. 12. Exemptions from Tax, Legal Process and Lien. — Any provision of the law to
the contrary notwithstanding, all contributions for the MUP Insurance Fund and all accruals
thereto and income or investment earnings therefrom shall be exempt from any tax,
assessment, fee, charge, or customs or import duty in accordance with Section 39 of Republic
Act No. 8291, otherwise known as “The Government Service Insurance System Act of 1997.”

Sec. 13. Government Guarantee. — The government of the Republic of the Philippines
hereby guarantees the fulfillment of the obligations of the GSIS to military and uniformed
personnel members covered by the MUP Insurance Fund as and when they fall due.

Sec. 14. Cost of MUP Insurance Fund Administration. - The MUP Insurance Fund
shall bear the costs of its administration and development, in such amounts and for limits as
the GSIS Board of Trustees may deem appropriate, but not exceeding ten percent (10%) of
the annual revenues from all sources: Provided, That the President of the Philippines may, on
the basis of actuarial and management studies, increase the allotment for the administrative
and operational expenses for the MUP Insurance Fund.

Sec. 15. Audit. — The audit of the MUP Insurance Fund shall be conducted in
accordance with Section 22 of Republic Act No. 8291, otherwise known as “The Government
Service Insurance System Act of 1997.”

Sec. 16. Pension Benefits for Pensioners and Active Uniformed Personnel Prior to the
Effectivity of this Act. — Existing pensioners and uniformed personnel in active duty prior to
the effectivity of this Act shall enjoy the retirement benefits provided under Presidential
Decree No, 1638 as amended, Republic Act No. 6975 as amended by Republic Act No. 8551,
Republic Act No. 9993, and other applicable laws.

Sec. 17. Appropriations. - The amount necessary for the implementation of the
provisions of this Act shall be included in the annual General Appropriations Act following
its enactment into law.

Sec. 18. Implementing Rules and Regulations. ~ Within ninety (90) days from
effectivity of this Act, the GSIS and the Department of Budget and Management (DBM)


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shall, in coordination with the Department of Environment and Natural Resources (DENR),
the Department of the Interior and Local Government (DILG), the Department of National
Defense (DND), and the Department of Transportation (DOT), and after consultation with
directly affected stakeholders, promulgate the rules and regulations to effectively implement
the provisions of this Act.

Sec. 19. Separability Clause. ~ If any provision, section or part of this Act shall be
declared unconstitutional or i

alid, such judgment shall not affect, invalidate or impair any
other provisions, sections or parts hereof.
Sec. 20. Repealing Clause. — All laws, decrees, orders, rules and regulations which
are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
Sec. 21. Effectivity. - This Act shall take effect fifteen (15) days following its
publication in at least two (2) newspapers of general circulation or in the Official Gazette.
Approved,