Vol. XXII, No. 133 [ BusinessWorld Online ]
Friday, February 6, 2009 | MANILA, PHILIPPINES
THE DEFENSE department is proposing the dissolution of the Retirement and Separation Benefits System (RSBS) of the armed forces through a law after a presidential directive for the same purpose failed to do so.
Nelson S. Victorino, Defense department head executive assistant and spokesman, said a draft bill has been prepared that proposes to deactivate the RSBS.
The bill is presently being reviewed by the Budget and Finance departments.
"Within the month, we hope to file the bill in Congress," he said.
The RSBS was formed in 1973 to manage the retirement and separation benefits of military personnel. The fund collected 5% of a soldier’s basic monthly pay, with troops ensured a 6% return upon retirement plus pension benefits.
Pres. Gloria Macapagal Arroyo issued Executive Order (EO) 590 in December 2006, ordering the deactivation of the RSBS by the end of that month.
Mr. Victorino said the EO was issued after it was discovered that the RSBS had suffered from poor liquidity.
Under the EO, Pres. Arroyo ordered that upon the determination of the net value of RSBS and its subsidiaries, it shall be transferred to the Land Bank of the Philippines (LBP) or the Development Bank of the Philippines (DBP), which will be responsible for the liquidation of its assets.
"The assets of the RSBS were invested in real estate," Mr. Victorino said, which normally take a long time to dispose.
A cabinet oversight committee composed of the secretaries of the Defense, Budget and Finance departments, the chief of staff of the Armed Forces of the Philippines and a representative of the Office of the President was created to oversee the liquidation of RSBS assets.
The committee, Mr. Victorino said, agreed to appoint a board of liquidators, instead, for RSBS’ assets and to close down RSBS via a law.
Edmundo F. Gammad, RSBS head for general services, said in a separate phone interview that the transfer of assets to LBP or DBP did not materialize because negotiations broke down. He declined to elaborate.
"We continue to refund the contributions of the military at the moment," he said.
He added that the government continues to pay all the retirement benefits through general appropriations.
Mr. Victorino said a bill proposing a new military pension system will be prepared next. "We cannot make a draft of the bill for the creation of a new system until the RSBS is closed," he said.
However, consultations with the DBP, the Social Security System and the Goverment Service Insurance System are ongoing to seek opinions on how to come up with a new retirement system for the military that is viable. — Louella D. Desiderio