REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No, _ 8476

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

Existing retirement laws provide for the automatic adjustment of retirement pension based on
the prevailing scale of base pay of similarly ranked active personnel. However, said laws are
non-contributory in nature, hence, no “seed fund” was established at the time of their
enactment, and the budget for the pension comes solely from the annual General
Appropriations Act (GAA). This form of budget sourcing eventually led to the ballooning of
pension costs, which may no longer be sustained by our meager government resources in the
coming years.

It is estimated that by year 2022, the total pension costs of the Armed Forces of the
Philippines will eventually surpass the salaries paid to its active personnel. If this condition is
allowed to persist, the government will eventually fail to provide adequate retirement pension
to the uniformed personnel

Passing this measure is the least we can do to honor the sacrifices of our heroes and to
recognize their unwavering fidelity and their life of service to the country, while we take into
consideration the government resources’ capacity to support their needs. By providing a
secure, reliable, sustainable and economically viable retirement benefit and pension system,
we fulfill the socio-economic mandate of our government to improve the lives of our veterans
and retirees.

This bill is the version approved by the Senate as sponsored by Sen. Antonio F. Trillanes IV
in the 16" Congress.

In view of the foregoing, the immediate approval of this bill is urgently sought.



REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. 8476

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
ESTABLISHING A SUSTAINABLE RETIREMENT AND PENSION SYSTEM BY
AMENDING PERTINENT LAWS ON THE RETIREMENT BENEFITS AND
PENSION OF THE UNIFORMED PERSONNEL OF THE UNIFORMED SERVICES
AND PROVIDING FUNDS THEREFOR

Be it enacted by the Senate and 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 of 2018.”

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 personnel of 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 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 (PD) 361, as
amended by PD 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;


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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 another uniformed service;

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

8)

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 and those in the active service of the uniformed services, upon their retirement, shall
be entitled to receive a monthly retirement pay equivalent to two and one-half percent (2
1/2%) 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. Provided, further, That,
the existing and future retirees of the Philippine Coast Guard shall likewise be subject to
adjustments based on the prevailing scale of base pay of the PCG uniformed personnel in the
active service. The funding of which shall still be sourced from the annual General
Appropriations Act (GAA).

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 (DOTr), 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 12 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, 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 to 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-seven percent (27%) of the monthly base pay 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 governing lease or joint development of public lands, including such
immovables 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-off,
write-offs, condonations, collections, reappraisals, prosecution and defense of suits, disposal

3


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 the AFP-RSBS the
contributions required under Section 4 of PD 361, as amended by PD 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 the effectivity of this Act.

SEC. 13. Implementing Rules 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 of this Act is declared invalid by a
competent court, the other provisions not affected by such declaration of invalidity shall
continue to be in force and effect.

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, RA 8435, as amended by
RA 9281; b) Section 42(a), RA 7279; and, c) Section 10(d), RA 7835.

RA 9993, RA 8551, PD 1638, PD 361, PD 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 the date of its
publication in the Official Gazette or in at least two (2) newspapers of general circulation.

Approved,