GSIS needs P7 T to take over military pension fund

The Government Service Insurance System (GSIS) may need as much as P7 trillion in additional funding if it ends up taking over the management of the military’s pension program.

In an interview, GSIS chairman Francisco Duque said the state fund has conducted an initial actuarial study on the possible transfer of the military pension system to the GSIS.

The transfer of the military pension program to the GSIS is one of the moves being considered by economic managers to address the ballooning pension cost of soldiers and policemen.

“In so far as the GSIS is concerned, we already did a study last year, now it depends on the coverage. It depends on the level of benefits that will be provided,” Duque said.

“However, nothing is sure yet. All we know is that there was a study, which put it at P4 trillion, then it became P7 trillion,” he said.

Duque said the funding requirement may still become lower if changes are introduced in the current military pension scheme, but said it may still require trillions in funding.

He said this was due to the early retirement age of uniformed personnel at 56 years old.

“So it means when they reach 56, they will start getting retirement benefits. Their contribution period will also be short, because they will retire early. All of these will have very serious actuarial implications,” he said.

Duque said options are now being considered on how the transfer of the military pension to the GSIS would take place.

“When we transfer, there are many options. We can transfer those new (uniformed personnel) only or we can also shift the old ones. The more inclusive the coverage is for the GSIS to assume, the higher the provision of social security benefits, we will need a bigger fund. So maybe it’s good to start small, affordable manageable, then we’ll see how the fund performs,” Duque said.

In a separate interview, Finance Secretary Carlos Dominguez said the government has yet to finalize its study on the military pension system as they are still gathering relevant data.

The finance chief said the government is eyeing to tap the Bases Conversion Development Authority to provide the assets, which can be used to pay the liabilities under the military pension program.

“That’s the work of the BCDA, that was set up to basically help the modernization so we are discussing with them what kind of assets they can assign to cover these liabilities,” Dominguez said.

“They own a lot of land, so we’ll see what assets are there that can be utilized for this,” he said.