GSIS deemed stable despite AFP pension risk

The Government Service Insurance System (GSIS) remains stable despite risks posed by military pension liabilities, Finance Secretary Carlos G. Dominguez, III said.

“The GSIS is not in any danger of not floating,” Mr. Dominguez said in a Viber message to reporters.

“As chief financial officer of the government, it is my duty to clearly define the financial issues facing the country, and one sure way of doing that is to make certain that all our liabilities including contingent ones, are recognized and understood by all so they can be rationally addressed by this and future administrations,” he added.

The inability to reform the military and uniformed personnel pension scheme has been flagged as a key fiscal risk for 2022 and the next administration, according to a report released by the Development Budget Coordination Committee (DBCC) Friday.

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% to 27% of the monthly base pay of the military and uniformed personnel, which is exorbitantly high when compared to the civilian rate of 12% 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 Department of Finance 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.

“It is also prudent to have it be managed by the GSIS so that administration of the retirement and pension systems are holistic and overseen by one central agency,” it added. — Luz Wendy T. Noble