AFPRSBS Champions Welfare Of Filipino Soldiers
By: Jude P. Morte
The country's civilian workforce, whether in the private sector or in the government, have their respective benefits systems given retired or separated employees These systems of benefits and pensions also apply to the men and women who serve in the Armed Forces of the Philippines. But instead of the Social Security Services (SSS) or the Government Insurance System (GSIS), the institution that handles soldier's benefits is the Armed Forces and Separation Benefits System (AFPRSBS).
The AFPRSBS was established on December 30, 1973, by virtue of Presidential Decree No 361 (PD No. 361). At the time the Armed Forces of the Philippines (AFP) recognized that the increasing fund requirements for the retirement and separation benefits of AFP personnel and increasing number of retirees would exert considerable pressure on the AFP budget.
Hence then-Philippine President Ferdinand E. Marcos deemed it necessary that a system be created for the welfare of those who serve in the Armed Forces of the Philippines (AFP) after their retirement or honorable discharge.
Also, the Philippine government was mandated by the said Presidential Decree to contribute P200 million to the system. It formally began its operations on October 8, 1976
Officers and enlisted personnel are required to contribute five percent of their monthly base pay to the system, which in turn is given to a fund (known as the military pension fund) that takes care of their benefits
The fund is allowed to grow until such time that the AFP and the government deem it fit to be a self-sustaining mechanism. Once that happens, it shall handle on its own (instead of the government) the payment of pension, separation, and other benefits of the AFP personnel.
Under PD No. 361, all active military personnel of the AFP are automatic members of the AFPRSBS and can avail of certain services such as on base housing projects and small business loans. Also, soldiers who become separated or retired from active service get a refund ( in one lump sum) of their contributions a six percent interest on the said refund.
At present, changes are being made to boost the fund into self-sustenance quickly.
One change is the commitment of the government to the AFPRSBS. Cesar M. Jaime, Jr. president of the AFPRSBS, said, " Although no further contributions to the AFPRSBS Fund has been infused at present, President Gloria Macapagal-Arroyo has made a commitment to infusing a further P200 million to the AFPRSBS."
Another change is the move towards a more balanced portfolio. It is known in government circles that the system has 80% of its portfolio in real estate. Steps have been made to shift the system's portfolio into more fixed income securities, include member loans and decrease the system's real estate and equity portfolio.
One step towards this balanced portfolio is the pursuit of a three-prong rehabilitation program that has managed to post a positive income for the past two years.
"This program consists of structural, organizational and financial reform components that, among other things, can restructure loans into a long-term facility. This program also settles obligations with creditor banks, asset cleansing activities, and preview business processes and manpower rationalization. Prudence, portfolio balance and safety of principal are the guiding principles of this program," Mr. Jaime said.
A recent inquiry by the Senate Blue Ribbon Committee has found that the system has a reputation for being prone to political abuse that can result in financial losses and place soldiers' contributions in jeopardy. In order to prevent abuses of the system and the fund, the AFPRSBS is following the Senate Blue Ribbon Committee's recommendation of creating a new AFPRSBS charter or revising the existing charter.
One way of doing this is via advice from the civilian world of pension fund handling. "Experts in pension fund management and administration from the World Bank (WB) and the International Social Security Association were sought and requested to provide advice on how to go about the process of introducing legislative reforms to the existing military pension scheme. We followed their recommendations and through these efforts a technical assistance grant from WB was given to us. This grant hopes to help us reform our benefit design, governance structure and funding mechanism." Mr. Jaime said.
The PHILSSA (Philippine Social Services Association) can learn much about the unique character and system of the AFPRSBS.
"When placed alongside the GSIS and the SSS, the AFPRSBS would seem small in terms of total membership and size of the fund being administered by each institution. However, the unique nature of military service demanded of the men and women in the military requires a different approach in addressing the social security concerns of the soldiers. The insights and potential learning experience that may be gained from the system's peculiar character are what the AFPRSBS offers to PHILSSA and its member institutions. With the membership of the AFPRSBS representing the soldiers' pension fund in PHILSSA, this association of social security institutions would now be broadly represented with employees from the government, civilian sector and national defense sector," said Mr Jaime.
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