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HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Seventeenth Congress
First Regular Session

HOUSE BILLNOD673

Introduced By:
REP. FRANCISCO JOSE F. MATUGAS II
15" District, Surigao del Norte (Siargao Island)

EXPLANATORY NOTE

The importance of reforming the benefit and pension system in the uniformed
service was emphasized by President Rodrigo R. Duterte himself in 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.”

Itis 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 JOSE F. GAS II


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

Seventeenth Congress
First Regular Session

5673

HOUSE BILL NO.

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 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)

b)

°)

d)

e)

8)

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;

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 shalll 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;

GSIS shall refer to the Government Service Insurance System;

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;

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

Uniformed Services shall refer to the Armed Forces of the Philippines
(AEP), 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 entitled to receive a
monthly retirement pay equivalent to two and one-half percent (2 4%) 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:

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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 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, 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 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.


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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 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),
RA. 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,