Palace orders abolition of AFP pension fund

By , on April 13, 2016


The Malacañang Palace (Facebook photo)
The Malacañang Palace (Facebook photo)

MANILA – Malacañang has ordered the abolition of the Armed Forces of the Philippines-Retirement and Separation System (AFP-RSBS) in an effort to curb inefficient public spending.

Memorandum Order No. 90 signed by Executive Secretary Paquito Ochoa Jr. said the interest liability of AFP-RSBS continues to grow and the Government-Owned and/or Controlled Corporation (GOCC) now faces a depletion of its retained earnings by the end of November 2016.

The memorandum noted that the pension and benefits of retired AFP personnel continue to be funded through the General Appropriations Act (GAA).

“The GCG (Governance Commission for GOCCs) finds the abolition of AFP-RSBS to be the best interest of the State in order to improve national productivity and reduce ineffective and inefficient spending of public funds,” it said.

Pursuant to the liquidation of AFP-RSBS’s assets, the memorandum approved the privatization of its wholly-owned subsidiaries, namely Monterossa Development Corp. (MDC) and Southern Utility Management and Services Inc. (SUMSI).

The AFP-RSBS Board, which shall act as the Board of Liquidators subject to oversight by the Governance Commission, is directed to cease collecting members’ contributions and accrual interest, and collect all indebtedness due to the AFP-RSBS.

The Board shall continue corporate operating budget for the continuation of leasing services, refund of AFP-RSBS members’ contributions as they fall due, and servicing of existing membership loan programs.

It shall also enter contracts for the sale of all its real estate assets, golf and country club shares and all other personal properties.

Affected officials and personnel of AFP-RSBS may avail the separation benefits in addition to retirement or separation benefits allowed under existing laws.

To implement abolition, the GCG shall be assisted by a Technical Working Group composed of representatives from the Departments of National Defense, Finance and Budget and Management; Privatization Management Office, AFP-RSBS and AFP.