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Republic of the Philippines aR i

HOUSE OF REPRESENTATIVES 3207

Quezon City, Metro Manila

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SEVENTEENTH CONGRESS
First Regular Session

nouse pitt No. 4'709

INTRODUCED BY: REPRESENTATIVE MAGNOLIA ROSA C. ANTONINO

EXPLANATORY NOTE

The Armed Forces of the Philippines Retirement and Separation Benefit
System (AFP-RSBS) was established on December 30, 1973 by virtue of
Presidential Decree No, 361 to provide retirement and separation benefits to the
militaty members of the AFP, including the Philippine Constabulary (PC), which
later became the Philippine National Police (PNP). In 1979, this Decree was
amended to establish a new system of retirement and separation for military
personnel by virtue Presidential Decree No. 1638, which was later amended by
Presidential Decree No, 1650.

Due to the failure to become a self-sustaining military pensioh fund, the
AFP-RSBS was dissolved by Executive Order No. 590 on December 31, 2006. As
the number of pensioners and their benefits continue to grow each year, the
funding of which being, sourced out of the annual appropriations of the AEP, the
pension crisis has grown out of proportion.

It is worthy to note that in 2005, the AFP pension budget was only P9.7
billion, This amount has ballooned to P24.1 billion in 2011 or a significant
increase of 149% in a span of seven (7) years.

Based on records of the AFP Pension and Gratuity Management Center
(AFP-PGMC), the pension arrears had grown tremendously from P16 Billion in
2010 for 111,404 military and PNP personnel and has now reached almost P20
billion this year,

What further aggravates the situation is the indexation of pensions to
salaries of those military personnel in the active service. Section 17 of PD 1638 or
the AFP Retirement Law of 1979 provides that the “retirement pay shall be
subject to adjustment on the prevailing, scale of base pay of military personnel in
the active service.” In other words, when the salaries of active soldiers and
policemen increase, the pension of retirees also increase.

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Under this situation, it is projected that the budget for AFP and PNP
pensioners will overtake the salary allocation for active military and PNP
servicemen by 2017. On the said year, pension pay is expected to amount to P54.1
billion compared to the salary of active military personnel which is estimated at
P51.9 billion.

According to Secretary Benjamin Diokno of the Department of Budget
and Management (DBM), even without salary increase, the data suggests that in
6 years, total pension may account for 80% of the military’s budget and only 20%
will be left for salaries of those in the active service,

Chis bill therefore seeks to establish a single retirement and separation
benefit system for government employees, including members of the Armed
Forces of the Philippines (AFP) and the Philippine National Police (PNP), in
order to avert the huge impact on future outlays of ballooning pensions and
establish a reliable funding scheme that will effectively guarantee the payment of
benefits of AFP and PNP retirees and pensioners, similar to all government
employees.

In view of the foregoing reasons, the approval of this bill is earnestly
sought.

Representative
Fourth District, Nueva Ecija

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SE

NTEENTH CONGRESS
irst Regular Session

an
HOUSE BILL NO, 4709

INTRODUCED BY: REPRESENTATIVE }MAGNOLIA ROSA C, ANTONINO.

AN ACT

ESTABLISHING A SINGLE RETIREMENT AND SEPARATION BENEFIT
SYSTEM FOR GOVERNMENT EMPLOYEES, INCLUDING MEMBERS OF
THE ARMED FORCES OF THE PHILIPPINES (AFP) AND THE PHILIPPINE
NATIONAL POLICE (PNP), AMENDING FOR THE PURPOSE
PRESIDENTIAL DECREE NO. 1146, AS AMENDED BY REPUBLIC ACT NO.
$291 OTHERWISE KNOWN AS “THE GOVERNMENT SERVICE
INSURANCE ACT OF 1997” AND FOR OTHER PURPOSES,

Be if enacted by the Senate and House of Representatives
of the Philippines ir Congress assembled

SECTION 1. Short Title. - This Act shall be known as the “Single
Retirement and Separation Benefit System for Government Employees Act.”

SE
shall mean:

2, Definition of Terms. - As used in this Act, the following terms

a. GSIS - The Government Service Insurance System created by
Commonwealth Act No. 186, as amended;

ployer - The national government, its political subdivisions,
branches, agencies or instrumentalities, including the Armed
Forces of the Philippines (AFP), the Philippine National Police
(PNP), government-owned and controlled corporations, and
financial institutions with original charters, the constitutional
commissions and the judiciary;

G Member or employee = all employees of the national
government, its political subdivisions, branches, agencies or
instrumentalities, including officers and members of the Armed
Forces of the Philippines (AFP) and the Philippine National
Police (PNP), government-owned and controlled corporations,
and financial institutions with original charters, the
constitutional commissions and the judiciary.

b,



d Board - The Board of Trustees of the Government Service
Insurance System;

SEC. 3. Membership in the GSIS. - Section 3 of Presidential Decree No,
1146, as amended by Republic Act No, 8291 otherwise known as the Government
Service Insurance Act of 1997, is hereby further amended to read as follows:

“SEC. 3. Compulsory Membership. - Membership in the
GSIS shall be compulsory for all employees receiving, compensation
who have not reached the compulsory retirement age, irrespective
of employment status [except] INCLUDING members of the
Armed Forces of the Philippines (AEP) and the Philippine National
Police (PNP), subject to the condition that they must settle their
financial obligation with the GSIS, and contractuals who have no
employer and employee relationship with the agencies they serve.”

“Except for the members of the judiciary and constitutional
commissions who shall have life insurance only, all members of the
GSIS shall life insurance, retirement, and all other social security
protections such as disability, survivorship, separation, and
unemployment benefits.”

SEC. 4. Retirement Benefits. - Sections 13 and 13-A of PD No. 1146, as
amended by the Government Service Insurance Act of 1997, are hereby further
amended to read as follows:

48)

13. ~ Retirement Benefits. - (a) Retirement benefits shall be:

(1) the lump sum payment as defined in this Act payable at
the time of retirement plus an old-age pension benefit equal to the
basic monthly pension benefit equal to the basic monthly pension
payable monthly for life, starting upon expiration of the five-year
(5) year guaranteed period covered by the lump sum; or

(2) cash payment equivalent to eighteen (18) months of his
basic monthly pension plus monthly pension for life payable
immediately with no five-year (5) guarantee.

“(b) Unless the service is extended by appropriate authorities,
retirement shall be compulsory for an employee of sixty-five (65)
years of age with at least fifteen (15) years of service, EXCEPT FOR
MEMBERS OF THE ARMED FORCES OF THE PHILIPPIN
(AFP) AND THE PHILIPPINE NATIONAL POLICE (PNP),
WHOSE COMPULSORY NOD DIBLE RETIREMENT
SHALL BE SIXTY TWO (62) YEARS OF AGE: Provided, That if he
has less than fifteen (15) vears of service, he may be allowed to

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“SEC, 13-A. Conditions for Entitlement, - A member who retires
from service shall be entitled to the retirement benefits enumerated
in paragraph (a) of Section 13 hereof: Provided, That

(1) he has rendered at least fifteen years of service;

(2) he is at least sixty (60) years of age AND FIFTY EIGHT
(58) YEARS OF AGE FOR MEMBERS OF THE ARMED.
FORCES OF THE PHILIPPINES (AFP) AND THE
PHILIPPINE NATIONAL POLICE (PNP), at the time of
retirement; and

(3) he is not receiving a monthly pension benefit from
permanent total disability.”

SEC, 5, Compulsory Life lusurance. ~ Section 24 of PD No. 1146, as amended
by the Government Service Insurance Act of 1997, is hereby further amended to
read as follows:

"SEC. 24. Compulsory Life Insurance. - All employees,
[except for] INCLUDING members of the Armed Forces of the
Philippines (AFP) and the Philippine National Police (PNP) shall,
under such terms and conditions as may be promulgated by the
GSIS, be compulsory covered with life insurance, which shall
automatically take effect as follows

(1) for those employed after the effectivity of this Act, their
insurance shall take effect on the date of their employment;

(2) for those whose insurance will mature after the effectivity
of this Act, their insurance shall be deemed renewed on the day
following, the maturity or expiry date of their insurance;

(3) for those without any life insurance as of the effectivity of
this Act, their insurance shall take effect following said effectivity..”

SEC. 6. Nou-diminution of Retirement and Separation Benefits. - Nothing
herein contained shall diminish the retirement and separation benefits already
enjoyed under the laws that existed at the time of retirement.

SEC. 7. Dnplementing Rules and Regulations. ~ The Government Service
Insurance System (GSIS), in coordination with the Department of National
Defense (DND), Department of Finance, Department of Budget and Management
(DBM), Armed Forces of the Philippines (AFP), shall promulgate the necessary
implementing rules and regulations within sixty (60) days upon the effectivity of
this Act.

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SEC. 8. Separability Clause, - If, for any reason, any part or provision of
this Act, is held invalid, the remaining provision not affected thereby, shall
remain in full force or effect.

SEC. 9, Repealing Clause. ~ Section 17 of Presidential Decree No, 1638, as
amended, in 50 far as the indexation of pensions to salaries of those military and
PNP personnel in the active service, and Section 39 of Republic Act No. 6975 are
hereby repealed.

All laws, decrees, executive orders, rules and regulations which are
inconsistent with this Act are hereby amended, repealed or modified
accordingly

SEC. 8. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a national newspaper of general

circulation:

Approved,