Republic of the Philippines

House of Representatives
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL No. 3421

Introduced by:
Representative FRANCISCO JOSE F. MATUGAS II

EXPLANATORY NOTE

This bill, which seeks to reform the benefit and pension system in
the uniformed service, has been certified as urgent by the President. The
importance of this bill was emphasized by the President as early as his
Budget Message for the Fiscal Year 2017:

“The reform on Military and Uniformed Personnel (MUP)
pension shall be pursued in view of the ballooning budget burden
where the total cost of the pensions of retired soldiers will exceed
the compensation of those in the active service. The proposed law
will create a pension fund that is similar to or part of the
Government Service Insurance System, replacing the current
system where the pensions of the military and other uniformed
personnel are appropriated annually by Congress.”

The above pronouncement of the President is in line with the
findings of the Development Budget Coordination Committee, in its Fiscal
Risk Statement (2015-2016), that the pension costs of all uniformed
services are rapidly increasing every year. In 2016, the pension budget
amounted to P71.0 billion and which was projected to reach more than
double in eight years at P187.9 billion. According to the Committee, the
problem is “mainly attributable to the features present in all existing
retirement laws of the uniformed services — (a) pension entitlement of a
retiree is automatically adjusted based on the prevailing scale of base pay
for similarly ranked active personnel; (b) pension is non-contributory in
nature hence budget comes from the annual general appropriations of the
government; and (c) early entitlement to pension benefits even before
attaining the compulsory retirement age of fifty-six.”


It is therefore imperative that we introduce reforms in the
pension system of uniformed personnel to make it more sustainable.
The immediate passage of this bill is, therefore, earnestly sought.

Francisco J@se F. Matugas II
Surigao del Norte, First District
(Siargao Island)


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Republic of the Philippines
House of Representatives

Quezon City, Metro Manila

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. eee

Introduced by:
Representative FRANCISCO JOSE F, MATUGAS II

AN ACT
AMENDING PERTINENT LAWS ON THE RETIREMENT
BENEFITS AND PENSION OF UNIFORMED PERSONNEL OF
THE UNIFORMED SERVICES AND PROVIDING FUNDS
THEREFORE

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

SECTION 1. Title. — This Act shall be known as the “Unified
Uniformed Personnel Retirement Benefits and Pension Reform Act”.

SEC. 2. Declaration of State Policy. — The State duly recognizes the
vital role of the uniformed services in providing internal and external
security, promoting peace and order, ensuring public safety and further
strengthening local government capability aimed towards the effective
delivery of basic services to the citizenry. The State also recognizes the
extraordinary hazards, risks, perils and dangers that the uniformed
services encounter in the performance of their duties.

It shall therefore, be the prime concern of the State to provide all
uniformed personnel adequate remuneration and benefits, including

retirement benefits and pension. To this end, the State shall ensure that


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the retirement benefits and pension scheme of the uniformed personnel is
secure, reliable, and sustainable.

SEC. 3. Definition of Terms. — As used in this Act, the following
terms shall have the corresponding meanings hereinafter set forth:

a) AFP-RSBS shall refer to the Armed Forces of the Philippines
Retirement and Separation Benefits System established by virtue of
Presidential Decree (P.D.) 361, as amended by P.D. 1656;

b) Existing retirees shall refer to retired uniformed personnel
who are currently receiving or entitled to receive retirement benefits and
pension under existing laws applicable to the uniformed services at the
time of the effectivity of this Act;

©) Future Retirees shall refer to uniformed personnel active at
the time of the effectivity of this Act, and to new entrants, all of whom, at
the time of their actual retirement from the uniformed services, are
eligible to receive retirement benefits and pension under existing laws
applicable to the uniformed services;

d) — GSIS shall refer to the Government Service Insurance System;

e) New Entrants shall refer to uniformed personnel who enter
the uniformed services upon the effectivity of this Act, excluding those who
entered the uniformed services through lateral entry from uniformed
service;

f Uniformed Personnel shall refer to the officers and enlisted
personnel of the uniformed services; and

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

SEC. 4. Standardizing the Uniformed Services Monthly Retirement

Pay. - New entrants of the uniformed services, upon retirement, shall be

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entitled to receive a monthly retirement pay equivalent to two and one-
half percent (2 %%) for each year of active service rendered, but not
exceeding ninety percent (90%), of the monthly base and longevity pay of
the grade next higher than the permanent grade last held.

SEC. 5. - Rationalized Adjustment of Retirement Benefits and
Pension. The retirement benefits and pension of all new entrants shall not
be subject to automatic adjustments based on the prevailing scale of base
pay of active uniformed personnel: Provided, however, That the existing
and future retirees shall continue to receive retirement benefits and
pension and their corresponding automatic adjustments.

SEC. 6. Receipt of Retirement Benefits and Pension.- All new
entrants who, at the time of their actual retirement, are eligible to receive
retirement benefits and pension under existing laws applicable to the
uniformed services shall be entitled to receive their lump sum benefit
equivalent to three (3) years pay within one (1) month of their effective
date of retirement.

SEC. 7. Automatic Review. - The retirement benefits and pension of
the new entrants shall be reviewed commencing two (2) years after the
year of retirement of the first new entrant retirees and every two (2) years
thereafter, by the Department of National Defense (DND), Department of
Interior and Local Government (DILG), Department of Justice (DOJ),
Department of Transportation and Communication (DOTC), Department
of Budget and Management (DBM), the Department of Finance (DOF),
and the GSIS for the purpose of recommending to the President, for his
approval, appropriate adjustments thereto, in accordance with rules and
regulations to be jointly promulgated by the DOF and the DBM under
Section 13 of this Act.

SEC. 8. Disability Pension. - All uniformed personnel who are

disabled in the line of duty shall be eligible to receive a monthly pension,


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the rates of which shall be determined by the respective department
concerned.

SEC. 9. Creation of a Uniformed Personnel Retirement Fund and
Sources of Funding. - A Uniformed Personnel Retirement Fund (UPRF), to
be managed by the GSIS, shall be established for the sustainability of the
retirement benefits and pension of uniformed personnel.

The GSIS shall create a new department which shall exclusively
administer the UPRF for the payment of retirement benefits and pension
of new entrants.

The UPRF shall be financed through the following:

(a) Mandatory Contributions. Upon the effectivity of this Act, it
shall be mandatory for new entrants to contribute a percentage of their
monthly compensation as personal share and for the National Government
to contribute a corresponding share sourced from the annual general
appropriations for the maintenance of the UPRF, as provided hereunder:

i) New entrants shall contribute nine percent (9%) of their
monthly compensation as personal share and for the National
Government a corresponding share of eighteen percent (18%); and

ii) The National Government representing the active
uniformed personnel’s contribution, shall contribute twenty-two
percent (22%) of the monthly compensation of the aforementioned
uniformed personnel.

(b) Additional Sources of Funding. Additional funds for the
maintenance of the UPRF shall be sourced from:

i) The proceeds derived from the sale or disposition of
public lands, as may be authorized by the President for this purpose;

ii) The proceeds derived from the lease or joint development
of public lands, as may be authorized by the President for this

purpose, pursuant to the provisions of existing laws and regulations


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governing lease or joint development of public lands, including

such immovable and other facilities as may be found therein;

and

iii) The proceeds derived from reclamation projects to be
approved by the President for this purpose.

SEC. 10. Deactivation of the AFP-RSBS. - The AFP-RSBS shall be
deactivated upon the effectivity of this Act.

For purposes of this Section, the AFP-RSBS Board, at the option of
the Secretary of National Defense, shall constitute the Board of
Liquidators (BOL), which is mandated to supervise collecting and realizing
the assets of the AFP-RSBS, and effect the settlement of the obligations of
the AFP-RSBS to third persons. The BOL is hereby authorized to perform
such other functions as may be necessary for the purpose of winding-up
the affairs of the AFP-RSBS, which may include, but are not limited to, the
payment of obligations, set-offs, write-offs, condonations, collections,
reappraisals, prosecution and defense of suits, disposal and conveyance of
properties, and distribution of assets: Provided, That the BOL shall
continue to perform its mandated duties and authorized functions until all
the obligations of the AFP-RSBS have been settled, for a period not to
exceed three (3) years from the time the BOL is constituted: Provided,
further, That the remaining assets and obligations of the AFP-RSBS, if
any, shall be transferred to the UPRF after the said three-year period.

SEC. 11. Termination of Contributions to the AFP-RSBS. - Upon the
effectivity of this Act, the active AFP personnel shall immediately cease to
pay to AFP-RSBS the contributions required under Section 4 of P.D. 361,
as amended by P.D. 1656.

SEC. 12. Return of Contributions Made to the AFP-RSBS. -All
contributions previously paid by the active uniformed personnel of the

AFP shall be refunded within a period not to exceed three (3) years from


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effectivity of this Act.

SEC. 13. Implementing Ruled and Regulations. - Within sixty (60)
days from the effectivity of this Act, the DBM and the DOF, in
consultation with the GSIS, shall promulgate the necessary rules and
regulations for the effective implementation of this Act.

SEC. 14. Separability Clause. - If any provision, section or part of
this Act shall be declared unconstitutional or invalid, such judgment shall
not affect, invalidate or impair any other provisions, sections or parts
hereof.

SEC. 15. Repealing Clause. — The pertinent portions of the following
legal provisions, insofar as they dispose of the net income of the Philippine
Reclamation Authority, are hereby repealed and/or modified accordingly:
(a) Section 112, R.A. 8435, as amended by R.A. 9281; (b) Section 42 (a),
R.A. 7279; and (c) Section 10 (d), R.A. 7835.

R.A. 9993, R.A. 8551, P.D. 1638, P.D. 361, P.D. 1656 and all other
laws, decrees, orders, rules and regulations, or parts thereof, specifically
inconsistent with any provision of this Act shall be deemed repealed,
amended or modified accordingly.

SEC. 16. Effectivity. - This Act shall take effect fifteen (15) days after

its publication in the Official Gazette or in a newspaper of general

circulation.
Approved,