State pension fund Government Service Insurance System (GSIS) is willing to augment the financing for military pensions, an official said.
“We are willing, this is what we do, this is our job so we will try to expand for those who will need our expertise,” Wick Veloso, GSIS president and general manager Wick Veloso told reporters.
“In the Senate, when there is a discussion there, we will make sure that we will help to manage it, but we can’t just include government funds in the military funds, we will only provide services,” he added.
Moreover, Veloso added that capital infusion is necessary. “Without contribution, we cannot give the government funds, our employees for this. I don’t have a final number yet but it’s big.”
The GSIS said that it needs law so it can move forward.
“We can’t just act on it, so when it is approved as a law, we will move,” Veloso said.
Key risk identified
In December, the Development Budget Coordination Committee (DBCC) said the inability to reform the military and uniformed personnel pension scheme has been flagged as a key fiscal risk.
It cited pending measures including Senate Bill 1419, which seeks to further boost current retirement benefits and pensions for military and uniformed personnel.
“Said contribution rates vary across bills but generally range from 18 percent to 27 percent of the monthly base pay of the military and uniformed personnel, which is exorbitantly high when compared to the civilian rate of 12 percent of the monthly basic salary,” the DBCC said.
“This will result in the ballooning of retirement and pension requirements over the next few years, without the correlative funding sources to support them,” the report added.
A previous study by the GSIS showed that the government needs to allot P9.6 trillion to keep the pension system afloat without reforms.
An actuarial study by the finance department concluded that the creation of a retirement fund solely for military and uniformed personnel will require an additional P45 billion annually.
Instead of following through on a recommendation for a separate authority that will oversee such retirement funds, the DBCC backed the GSIS as fund administrator, “given its actuarial, investment, and fund management expertise and experience,” the DBCC said.
Meanwhile, on rightsizing, the GSIS will also implement if it is made into a law.
“But I just want to share that we will have a really hard time because as you can imagine, the contribution we will get will be small, it will be short and giving money will be long, so we will have a hard time.
But if the government thinks this is appropriate for our people for the government to run properly, we will abide,” Veloso added.
Furthermore, he said that there are also two types of properties that the GSIS has, there are the small properties that have been foreclosed houses, “that’s what we want to sell as much as possible to those who want to own a house, I really want to see because it is only available to government employees, maybe we can also give it to others, in the private sector if possible, I want to know if it will contradict other agreements.”
“But our big ticket items, we plan to join a joint venture (JV), we will make an announcement on how we can expedite fair bidding for them to participate in order to have JV projects, we will not sell them, we will partner with the private sector and they will bid on it not only price, but also what kind of project you will put here and how our members will benefit a lot,” Veloso said.