Metro Manila (CNN Philippines, August 21) — The Department of Finance (DOF) is contemplating an asset transfer in favor of the Government Service Insurance System (GSIS) to boost the state-run pension fund’s balance sheet when it takes on the role of managing the Philippine military’s pension system.
Finance Secretary Ben Diokno said in a late Friday briefing that the new pension scheme \”has to be managed by GSIS.\”
On Aug. 15, a House panel approved a proposal that consolidated 12 earlier bills seeking to reform what Diokno called an “unsustainable” pension system that could lead to a “fiscal collapse.”
The approved version requires new entrants to contribute a portion of their monthly salary to the pension fund. Currently, military and uniformed personnel’s salaries are untouched as their pensions are funded fully by the national budget.
It also puts a 50% cap on the automatic increases in pension to match the salaries of those of similar rank in active service whenever the latter gets a pay raise. Currently, the indexation of pensions received by retired MUPs to salary increases of those of similar rank is at 100%.
Under the proposal, GSIS will manage and invest the collected premiums.
However, in an interview last May, GSIS President and General Manager Jose Arnulfo \”Wick\” Veloso said he needs to learn more about the agency’s proposed role and added that GSIS would need more funds from the government if it were to manage the military’s pension fund.
\”Kaya we are thinking of assets na ipe-pledge namin… Hindi namin ililipat sa GSIS without identifying some assets we can transfer,\” Diokno told reporters during late Friday’s briefing. He did not say which state assets will be transferred to GSIS.
[Translation: So we are thinking of assets that we will pledge… We will not transfer to GSIS without identifying some assets we can transfer.]
In a follow-through statement responding to Defense Secretary Gilbert Teodoro’s opposition to the 50% indexation, Diokno said he understands Teodoro position “but as economic managers, it our job to ensure the sustainability of the proposed pension fund and individual contribution is really necessary to achieve that.”
