NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
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ot Jof i. -' 
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23 SEP -7 All ‘-A6
SENATE
RECEIVED B’/
Introduced by SENATOR IMEE R. MARCOS
AN ACT
CREATING A SUSTAINABLE FRAMEWORK FOR THE PENSION SYSTEM OF 
THE ARMED FORCES OF THE PHILIPPINES, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Article XVI, Section VIII of the 1987 Philippine Constitution provides that the 
State shall, from time to time, review to increase the pensions and other benefits due 
to retirees of both the government and the private sectors.
Under the present system, the pension requirements of the Military and 
Uniformed Personnel retirees, which are solely funded by the General Appropriations 
Act of the National Government, have become onerous and unaffordable. Pension 
benefits increase alongside the salary hikes of those in active service as retired 
uniformed personnel enjoy indexation of benefits. Hence, there is a need for additional 
sources of financing besides the National Budget.
Further, the State recognizes the crucial role of the Armed Forces of the 
Philippines (AFP) in protecting the Filipino people, and in ensuring the sovereignty and 
territorial integrity of the Philippines. The State also recognizes the extraordinary 
dangers, hazards, risks and perils that members of the AFP encounter in the 
performance of their official functions and duties. It is, thus, the State's primary 
concern that they receive the adequate benefits and pension due to them.
As of 31 December 2022, the payroll records of the Armed Forces of the 
Philippines showed that there are 137,649 pensioners covered by the monthly pension 
requirement for the first quarter of 2023.
This bill seeks to create and provide a sustainable framework for the pension 
system of the Armed Forces of the Philippines. Therefore, the passage of this bill is 
earnestly sought.
IMEE R. MARCOS^


NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
Second Regular Session 
)
SENATE
s.B. No. 2434
of tlif g- 1: ;
23 SEP -7 AH *47
RECEIVED B',
Introduced by SENATOR IMEE R. MARCOS
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AN ACT
CREATING A SUSTAINABLE FRAMEWORK FOR THE PENSION SYSTEM OF 
THE ARMED FORCES OF THE PHILIPPINES, APPROPRIATING FUNDS 
THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
Section 1. Short Title. - This law shall be known as the "Armed Forces of 
the Philippines (AFP) Pension System Act".
Sec. 2. Declaration of State Policy. - The State duly recognizes the vital role 
of the Armed Forces of the Philippines (AFP) in ensuring security and promoting 
peace and order and further strengthening the 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 members 
of the AFP encounter in the performance of their official functions and duties.
To compensate the invaluable service that they have provided during their 
years in active service, it shall be the State's primary concern to provide all retirees 
of the AFP, as well as their surviving spouses and orphans, adequate pensions and 
retirement benefits.
Sec. 3. Funding Sources. -The following shall be the source of funds for 
the pensions and retirement benefits of AFP members:
(a) New entrants to the AFP shall contribute nine percent (9%) of their basic 
monthly compensation as their personal share to the AFP Trust Funds 
while twelve percent (12%) shall be provided by the National 
Government as its share to the AFP Trust Funds. Provided that, for 
purposes of this Act, "new entrant" shall refer to newly-appointed, newly- 
recruited or newly re-admitted military and uniformed personnel after the 
effectivity of this Act. Provided further that, the AFP Trust Fund


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Committee created under Sec. 10 of this Act may determine the amount
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necessary to capitalize and sustain the AFP Trust Funds;
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(b) Residual assets of the AFP Retirement Separation Benefits System;
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(c) The proceeds from the sale of military reservations, as may be authorized
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by Congress, pursuant to the provisions of existing laws and regulations
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governing sales of government properties, including such immovable and
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other facilities as may be found therein, not otherwise covered by the
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Bases Conversion and Development Authority, as provided for in Republic
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Act No. 7227, as amended;
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(d) The proceeds from the lease or joint development of military reservations,
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as may be authorized by the President, pursuant to the provisions of
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existing laws and regulations governing lease or joint development of
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government properties, including such immovables and other facilities as
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may be found therein, not specifically enumerated under Republic Act No.
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7227, as amended;
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(e) Shares of the AFP from the proceeds of the sale of military camps
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provided for under Republic Act No. 7227, as amended, and at least fifty
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percent (50%) of the proceeds, net of direct expenses authorized to be
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deducted from such proceeds from the lease and/or joint venture
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agreements and such other dispositions pertaining to the same camps in
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accordance with applicable and/or existing orders, rules, regulations and
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issuances; and
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(f) Proceeds derived from public-private partnerships entered into by the
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Department of National Defense (DND) or the AFP, as may be authorized
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by the President, pursuant to the provisions of existing laws and
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regulations.
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Sec. 4. Compulsory and Optional Retirement - Active AFP personnel shall
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be compulsorily retired upon reaching the age of fifty-seven (57) years old and may
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voluntarily retire upon accumulation of twenty (20) years of satisfactory active
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service, subject to the approval of the appropriate authority.
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Sec. 5. Retirement Pay. - Monthly retirement pay shall be fifty percent
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(50%) of the base pay and longevity pay of the grade next higher than the
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permanent grade last held by the personnel in case of twenty (20) years in active
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service, increasing by two and one-half percent (2.5%) for every year of active
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service rendered beyond twenty years to a maximum of ninety percent (90%) for
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thirty-six (36) years of active service and over. Provided that, nothing in this Section
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shall be construed as authorizing adjustment of pay or payment of any differential
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in retirement pay to AFP personnel who are already retired prior to the approval of
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this Act.
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Sec. 6. Separation Pay. - Any AFP personnel who shall separate or resign
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from the service without reaching twenty (20) years of satisfactory active service


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shall receive a separation pay equivalent to one-month base pay plus longevity pay 
of the permanent grade the AFP personnel holds at the time of separation for every 
year of active service.
Sec. 7. Capped Automatic Indexation to Adjustments. - The pension of 
retired AFP Personnel and survivorship pension of qualified survivors shall be 
subject to an automatic indexation of one hundred percent (100%) of the increase 
in the base pay of the AFP Personnel in active service holding the same rank during 
the same year. Provided that, the President of the Philippines, upon 
recommendation of the AFP Personnel Trust Fund Committee, is authorized to 
adjust the pension and survivorship pension at a rate lower than what is prescribed 
herein due to adverse economic conditions, as certified by the Development Budget 
Coordination Committee.
Sec. 8. Armed Forces of the Phiiippines (AFP) Trust Fund. - The Armed 
Forces of the Philippines (AFP) Trust Fund shall be created to support the separation 
and retirement benefits of the AFP, including the payment of disability and 
survivorship pension under existing laws.
Sec. 9. Armed Forces of the Phiiippines (AFP) Trust Fund Committee. - An 
AFP Trust Fund Committee shall be created after the effectivity of this Act which 
shall consist of the following members:
a) Secretary of Finance (as Chairperson);
b) Chief of Staff of the AFP;
c) Secretary of National Defense;
d) Administrator of the Philippine Veterans Affairs Office;
e) President and General Manager of the Government Service Insurance 
System; and
f) Four (4) qualified and competent economic managers with business and 
financial experience and expertise who shall be appointed by the 
President.
The Bureau of Treasury shall serve as the Secretariat of the Committee and 
maintain the records and accounts of all investments, receipts, disbursements, and 
other transactions relating to the management, administration, and utilization of 
the AFP Trust Fund. Provided that, such records and accounts shall be maintained 
in accordance with existing accounting and auditing laws, rules and regulations, 
and shall be audited by the Commission on Audit.
Sec. 10. Powers and Functions of the AFP Trust Fund Committee. - The 
Committee shall exercise the following powers and functions:
(a) Act as Trustee of the AFP Trust Fund and such other assets as may be 
assigned to the pension system of the AFP Personnel;


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(b) Manage the AFP Trust Fund, through the fund manager designated under 
Section 11 herein, and ensure that the fund is actuarialiy and financialiy optimai 
and sustainabie;
(c) Authorize the necessary expenses to manage and administer the AFP 
Trust Fund;
(d) Impiement and execute functions reiated to the disposition of assets 
identified under this Act;
(e) Declare dividends out of the unrestricted earnings of the AFP Trust Fund 
which shall be payable in cash;
(f) Cause the undertaking of a survey or consultation to assess the 
preferences of the AFP Personnel on the features of the pension system, including 
the manner to pay for contributions and interest in various benefit and investment 
schemes;
(g) Commission an actuarial evaluation of the fiscal sustainability of the 
pension scheme, including specific recommendations on the rates for contributions 
and investment options for the AFP Trust Fund, as applicable;
(h) Authorize the necessary expenses to manage and administer the AFP 
Trust Fund; and
(i) Perform other functions, as may be necessary, for the effective 
management of the AFP Trust Fund;
Provided that, within one (1) year from the effectivity of this Act, the fund 
manager shall conduct the studies prescribed under this Section. Provided further 
that, the findings and recommendations obtained from the studies shall be 
submitted to the Committee which shall promulgate the implementing rules and 
regulations with respect to the mandatory contribution scheme, and other features 
of the pension scheme, as applicable.
Sec. 11. Manager of the AFP Trust Fund. - The Government Service 
Insurance System (GSIS) shall be designated as the fund manager and benefits 
administrator of the AFP Trust Fund, and shall perform the following:
(a) implement an investment management and benefits administration 
strategy as directed by the Committee;
(b) monitor market and economic trends and track securities to make 
informed investment decisions;
(c) recommend its portfolio strategy to the Committee;
(d) track financial results of companies in the portfolio and its various 
metrics, including price-to-earnings ratios, inflation-adjusted return, sales, 
earnings, and dividends; and
(e) perform other acts necessary to fulfill its mandate under this Act, or such 
acts, as may be delegated by the Committee.
Sec. 12. Structure, Staffing Pattern, and Operating Budget - The 
organizational structure and staffing pattern for the management of the AFP Trust 
Fund within the GSIS and for the creation of the AFP Trust Fund Secretariat within


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the Bureau of the Treasury shall be approved by the Committee within ninety (90) 
days from the effectivity of this Act. Provided that, appointees of various positions 
shall comply with the qualification standards approved by the Civil Service 
Commission (CSC). Provided further that, the GSIS shall be entitled to management 
fees, to be charged against the AFP Trust Fund.
Sec. 13. Government Guarantee. - The government of the Republic of the 
Philippines hereby guarantees the fulfillment of the obligations of the AFP Trust 
Fund to its members as and when they fall due.
Sec. 14. Administration Fees. - Any cost, expense or other payment directly 
attributable to the administration of the AFP Trust Fund shall be charged to the AFP 
Trust Fund.
Sec. 15. Exemptions from Tax, Legal Process, and Lien. - All laws to the 
contrary notwithstanding, all contributions to the AFP Trust Fund and all accruals 
thereto and income or investment earnings therefrom shall be exempt from any 
tax, assessment, fee, charge, or custom or import duty in accordance with Section 
39 of RA 8291, otherwise known as "The Government Service Insurance System 
Act of 1997".
Sec. 16. Non-encumbrance of Benefits. - The benefits authorized under this 
Act, except as provided herein, are not subject to attachment, garnishment, levy, 
execution or any tax whatsoever, and may not be assigned, ceded, or conveyed to 
any third person. Provided that, if a retired or separated military personnel who is 
entitled to any benefit under this Act has unsettled money or property 
accountabilities incurred while in the active service, an amount not exceeding fifty 
percent (50%) of the pension gratuity or other payment due to the military 
personnel or their survivors under this Act may be withheld and be applied to settle 
such accountabilities.
Sec. 17. Appropriations. - Upon effectivity of this Act, an amount of twenty- 
five million pesos (Php 25,000,000.00) shall be allocated to the AFP Trust Fund. 
Thereafter, the amount necessary for the effective implementation of this Act shall 
be included in the annual General Appropriations Act (GAA).
Sec. 18. Implementing Rules and Regulations. - Within ninety (90) days 
from the effectivity of this Act, the Committee, in coordination with the GSIS, shall 
promulgate the rules and regulations to effectively implement the provisions of this 
Act.
Sec. 19. Separability Clause. - If, for any reason, any section or provision of 
this Act is declared unconstitutional or invalid, other sections or provisions which are 
not affected thereby shall continue to be in full force and effect.


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Sec. 20. Repealing Clause. - All laws, decrees, executive orders,
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proclamations, rules and regulations, and other issuances, or parts thereof, which
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are inconsistent with the provisions of this Act are hereby repealed or modified
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accordingly.
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Sec. 21. Effectivity Clause. - This Act shall take effect fifteen (15) days
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following its publication in the Official Gazette or in two (2) newspapers of general
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circulation.
Approved,