New Separation, Retirement, and Pension System for the Military and the Uniformed Personnel

TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES JUL 15 P1:52 First Regular Session RECEIVED BY SENATE S.B. No.. Introduced by SEN. WIN GATCHALIAN AN ACT PROVIDING A NEW SEPARATION, RETIREMENT, AND PENSION SYSTEM FOR THE MILITARY AND THE UNIFORMED PERSONNEL, AND APPROPRIATING FUNDS THEREFOR EXPLANATORY NOTE Absent any reform, the existing military and uniformed personnel (MUP) retirement scheme continues to contribute to the ballooning government budget deficit as the latest salary adjustment of active MUP translates to a corresponding increase in the pension that retired MUPs receive. Being non-contributory, the MUP pension and any increases thereto is drawn solely from the national budget through the General Appropriations Act. In a 2020 actuarial study conducted by the Government Service Insurance System (GSIS) on the financial impact of the existing MUP retirement scheme, the total funding requirement of the current system was estimated at PhP 9.6 trillion. If the current system prevails, the GSIS projects that around PhP 850 billion may need to be allocated to MUP pensions annually for the next 20 years. ' Based on a September 2021 presentation of the GSIS assuming a lower percentage of salary increase and including new entrants, the adjusted total funding requirement under the existing MUP 1 Department of Finance. Available at https://www.dof.gov.ph/btr-pension-reform-to-ensure-fiscal-stability-sustained- support-to-military-other-uniformed-personnel/.

retirement scheme still remains at over Php. 5.7 trillion or roughly Php 500 billion in annual payments if amortized over the course of 20 years. Accordingly, this bill seeks to avert this impending fiscal disaster by establishing a separate separation, retirement, and pension system for the military and uniformed personnel. This fund shall be managed by the GSIS, requiring mandatory contributions of 7% from military personnel and 9% from other uniformed personnel. Meanwhile, the National Government shall contribute 14% and 12% as counterpart share for the AFP Trust Fund and the Uniformed Personnel Trust Fund respectively. This bill will be applied prospectively in order to ensure that existing pensioners and MUPs in active service prior to its approval shall enjoy the prevailing retirement benefits at the time of their initial appointment, recruitment, or admission to the uniformed services. Through the creation of these separate funds, it is hoped that a viable and sustainable funding source for pension requirements shall be secured, and the responsible management of scant government resources shall be realized. In view of the foregoing, the immediate passage of this bill is earnestly sought. элен WIN GATCHALIAN

Pher of ne TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 JUL 15 P1:52 First Regular Session SENATE RECEWED BY S.B. No. Introduced by SEN. WIN GATCHALIAN AN ACT PROVIDING A NEW SEPARATION, RETIREMENT, AND PENSION SYSTEM FOR THE MILITARY AND THE UNIFORMED PERSONNEL, AND APPROPRIATING FUNDS THEREFOR Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: TITLE I GENERAL PROVISIONS

SECTION 1. Declaration of Policy. - The State duly recognizes the vital role of

the Military and Uniformed Personnel in providing internal and external security, promoting peace and order, and ensuring public safety. The State also recognizes its obligation to ensure a secure, reliable, and sustainable pension system for the Military and Uniformed Personnel given the distinctive personal risks in their role in nation-building, national defense, and security. The State shall provide immediate and adequate care, benefits, and other forms of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans. Towards these ends, the State shall establish a fiscal framework that fully supports their funding requirements.

SEC. 2. Coverage. - Unless otherwise specified, this Act shall apply only to new

entrants of the Military and Uniformed Services.

SEC. 3. Definition of Terms. -

a) New Entrants are Military or Uniformed Personnel, as referred under this Act, who entered or re-entered the Military or Uniformed Services after the effectivity of this Act; b) Military Personnel refers to employees of the government who wear uniforms, with ranks, may be armed or unarmed, primarily involved in national defense, enforcement of laws, and in the maintenance of peace, order, and security and who belong to the Armed Forces of the Philippines (AFP). c) Uniformed Personnel refers to employees of the government who wear uniforms, with ranks, may be armed or unarmed, primarily involved in the enforcement of laws, and in the maintenance of peace, order, and security and who belong to any of the following services: Philippine National Police (PNP), Philippine Coast Guard (PCG), Bureau of Fire Protection (BFP), Bureau of Jail Management and Penology (BJMP), Bureau of Corrections (BuCor), and the Hydrography Branch of the National Mapping and Resource Information Authority (NAMRIA); d) Pension refers to the sum of money representing the monthly retirement pay or the monthly life annuity of a Military or Uniformed Personnel; e) Survivors refer to the following: 1) Surviving spouse of the deceased Military or Uniformed Personnel who married the deceased prior to the latter's retirement or separation and not legally separated by judicial decree from the deceased issued on grounds not attributable to the surviving spouse: Provided, That entitlement to benefits shall terminate when the surviving spouse remarries, cohabits, engages in a common law relationship, commits any crime of violence or abuse against the children of the Military or Uniformed Personnel, is convicted of any crime which carries the penalty of imprisonment of more than six (6) years and one (1) day, loss of Philippine citizenship, or dies;

2) Surviving children refer to: Children born within a marriage contracted prior to the retirement or separation from the active duty; ii. Adopted and illegitimate children by the deceased while in active duty; and iii. Children who are eighteen (18) years old and above but suffering from mental or physical incapacity, or any disability that renders them total dependent on the deceased. Provided, That entitlement to benefits shall terminate when the surviving children attain eighteen (18) years of age or get married, except for surviving children who were duly medically certified by government medical practitioners, to be incapable of employment by reason of their mental or physical incapacity; 3) In the absence of surviving spouse and surviving children as mentioned in paragraphs (1) and (2) above, survivors shall refer to the surviving parent or parents, the surviving unmarried brothers and sisters who are below eighteen (18) years of age and without parental obligation, surviving brothers and sisters eighteen (18) years old and above who are incapable of employment by reason of their mental or physical incapacity: Provided, That their entitlement to benefits shall terminate upon their death; and f) Survivorship Pension refers to the monthly benefit or the monthly life annuity of the beneficiaries of a deceased Military or Uniformed Personnel who is retired under the provisions of existing laws. TITLE II MILITARY PERSONNEL SEPARATION, RETIREMENT, AND PENSION SYSTEM CHAPTER I RETIREMENT

SEC. 4. Active Duty. - It shall refer to the service as defined under Republic

Act No. 11709, as amended by Republic Act No. 11939, and its implementing rules and regulations.

SEC. 5. Compulsory Retirement. Military Personnel shall be compulsorily retired

from service in accordance with Republic Act No. 11709, as amended by Republic Act No. 11939, and its implementing rules and regulations. Military Personnel killed-in-action or wounded-in-action resulting in total permanent disability as duly certified by the appropriate medical certification process, 6 shall be deemed compulsorily retired for purposes of computing retirement benefits.

SEC. 6. Optional Retirement. - Military Personnel may voluntarily retire upon

accumulation of at least twenty (20) years of satisfactory active duty, subject to the 10 approval of the appropriate authority. CHAPTER II BENEFITS

SEC. 7. Retirement Grade and Pay. - The monthly retirement pay shall be fifty

percent (50%) of the monthly base pay and longevity pay of the permanent grade last held by the Military Personnel in case of twenty (20) years in active duty, increasing by two-point five percent (2.5%) for every year of active duty rendered beyond twenty (20) years to a maximum of ninety percent (90%) for thirty-six (36) years of active duty. Upon retirement, Military Personnel shall choose between the following modes of payment of retirement benefits: a) Lump Sum - To receive in advance and in one lump sum, retirement benefits equivalent to thirty-six (36) months; and three (3) years thereafter, to receive monthly retirement benefits as they accrue; or b) Direct Pension - To receive monthly retirement benefits as they accrue. The retirement pay of Military Personnel who is killed-in-action or wounded-in- action resulting in total permanent disability, as duly certified by the appropriate medical certification process, shall be computed at the rate of ninety percent (90%) of the monthly base and longevity pay of the retirement grade last held by the personnel regardless of years in active duty.

SEC. 8. Separation Pay. - Military Personnel who separate or resign from the

service without reaching twenty (20) years of satisfactory active duty shall receive a separation pay equivalent to one-month base pay plus longevity pay of the permanent grade held at the time of separation for every year of active duty: Provided, That such Military Personnel shall have rendered at least nine (9) years of satisfactory active duty prior to resignation or separation.

SEC. 9. Survivorship Pension Rates. - The survivorship pension rates of Military

Personnel shall be governed by existing laws and regulations created therefor.

SEC. 10. Adjustments in Pension. - There shall be no automatic adjustment of

the pension to the prevailing scale of salary of the active Military Personnel of the same rank: Provided, That the President of the Philippines is hereby authorized, subject to the recommendation of the Armed Forces of the Philippines Trust Fund Committee (AFP Trust Fund Committee) created under this Act, to adjust the retirement and survivorship pension by not less than one-point five percent (1.5%) thereof, in consideration of fiscal or economic conditions, as certified by the Development Budget Coordination Committee.

SEC. 11. Harmonization of Total Permanent Disability Benefits. - Military

Personnel with total permanent disability as a result of injuries sustained or sickness contracted in the performance of duty, duly certified by the appropriate medical 23 certification process, shall be compulsorily retired.

Sec. 12. Termination of Benefits. - Retired Military Personnel who lose their

Filipino citizenship shall be removed from the retired list and forfeit all rights to receive the benefits herein provided upon such loss. CHAPTER III ARMED FORCES OF THE PHILIPPINES TRUST FUND

SEC. 13. Armed Forces of the Philippines Trust Fund (AFP Trust Fund). - The

AFP Trust Fund is hereby created for the budgetary support and payment of

1 separation, retirement, pension, survivorship, and other benefits granted under this Act. The AFP Trust Fund is separate and distinct and should not be commingled with the Government Service Insurance System (GSIS) funds. The GSIS shall not advance funds and grant any form of loans to the AFP Trust Fund Committee from the GSIS administered funds.

SEC 14. Funding Sources. - The AFP Trust Fund shall be funded through the

9 following: a) Mandatory Contributions. - Military Personnel shall contribute seven percent (7%) of their base pay and longevity pay as personal share and the National Government shall contribute fourteen percent (14%) as its counterpart share: Provided, That the aforementioned rates may be adjusted by the Development Budget Coordination Committee, in consultation with the AFP Trust Fund Committee, on account of adverse fiscal or economic conditions or the fiscal constraints of the National Government; b) Additiona/ Sources of Funding. - The AFP Trust Fund may be funded from the proceeds of the following: 1. All residual assets and funds of the AFP Retirement and Separation Benefits System (RSBS); 2. Sale of military reservations, as may be authorized by Congress, pursuant to the provisions of existing laws and regulations governing sales of government properties, including such immovable and other facilities as may be found therein, not otherwise covered by the Bases Conversion and Development Authority (BCDA), as provided for in Republic Act No. 7227, otherwise known as the "Bases Conversion and Development Act of 1992, as amended; 3. Lease or joint development of military reservations, as may be authorized by the President, pursuant to the provisions of existing laws and regulations governing lease or joint development of government properties, including such immovable and other facilities as may be found therein, not specifically enumerated under Republic Act No. 7227, as amended;

4. Income derived from public-private partnerships entered into by the Department of National Defense (DND) or the AFP, as may be authorized by the President, pursuant to the provisions of existing laws and regulations; 5. Non-strategic real estate assets of the DND or the AFP as determined by the Secretary of National Defense; and 6. Earnings and dividends from investment made by the GSIS as the fund manager.

SEC. 15. AFP Trust Fund Committee. - To carry out the declared policy of this

Act, the AFP Trust Fund Committee, hereinafter referred to as the Trust Fund Committee, is hereby created. The AFP Trust Fund Committee shall be organized within ninety (90) days from the effectivity of this Act. It shall be composed of the following members: a) Secretary of Finance as Chairperson; b) Secretary of National Defense as Co-Chairperson; c) Chief of Staff of the AFP; d) Secretary of Budget and Management; and e) President and General Manager of the GSIS. The Bureau of the Treasury shall serve as the Secretariat of the Trust Fund Committee and maintain the records and accounts of all investments, receipts, disbursements, and other transactions relating to the management, administration, and utilization of the AFP Trust Fund: Provided, That these records and accounts are maintained in accordance with the existing accounting and auditing laws, rules and regulations, and audited by the Commission on Audit.

SEC. 16. Powers and Functions of the Trust Fund Committee. - The Trust Fund

Committee shall exercise the following powers and functions: a) Formulate policies, guidelines and programs to ensure that the AFP Trust Fund is actuarially and financially optimal and sustainable; b) Act as Trustee of the AFP Trust Fund and direct how the assets of the AFP Trust Fund are managed; c) Perform oversight functions over the AFP Trust Fund manager;

d) Provide the proper mechanisms for consultation and information dissemination among members regarding the management, utilization, investment, and administration of AFP Trust Fund; e) Implement and execute functions related to the disposition of assets identified under this Act; f) Commission an actuarial evaluation of the fiscal sustainability of the separation, retirement and pension scheme, including specific recommendations on the rates for contributions and investment options for the AFP Trust Fund, as applicable; g) Obtain information from any officer or office of local governments and agencies and instrumentalities of the National Government, as may be necessary; h) Assess possible risks to the fiscal sustainability of the pension of Military Personnel and propose appropriate policy interventions; i) Identify, manage, and control risks that the pension of the Military Personnel may pose to the National Government's fiscal position; j) Inform both Houses of Congress of such risks through the annual Fiscal Risk Statement and propose legislative reforms to address such risks; and k) Perform other necessary functions for the effective management of the AFP Trust Fund. CHAPTER IV INVENTORY, ACCOUNTING, AND DISPOSITION OF ASSETS

SEC. 17. Inventory of Assets. - Within thirty (30) days from the creation of the

AFP Trust Fund Committee, the Military Service, through the DND, shall submit a complete list of assets to the AFP Trust Fund Committee to identify additional sources of funding as provided in Section 14(b) of this Act. Thereafter, the AFP Trust Fund Committee shall conduct a complete accounting and inventory of the assets of the Military Service that may be used to support the AFP Trust Fund, including the amount, value, description and nature of such funds, properties, assets, records, choses in action, and other rights, claims, or causes of

action pertaining thereto, and submit a report to the Office of the President, both Houses of Congress, and the Commission on Audit (COA). SSEC. 18. Accounting of Assets. - Within thirty (30) days from the receipt of the inventory by the AFP Trust Fund Committee, the COA shall audit the accounting and inventory of the assets of the Military Service to determine the completeness of the inventory and establish the reasonableness of the asset valuation. Within one (1) year from the submission of the accounting and inventory of the assets of the Military Service, the COA shall submit to the AFP Trust Fund Committee, both Houses of Congress and the Office of the President the audit report, including the complete list of the assets of the Military Service and their valuation, and the empirical basis and the methodologies employed for the valuation.

SEC. 19. Disposition of Assets. - The AFP Trust Fund Committee shall prioritize

the disposition modes that may generate income from these assets without undertaking the sale thereof. The AFP Trust Fund Committee may recommend to the President the sale of an asset when there is a notice from the GSIS of an unfunded liability and the AFP Trust Fund is no longer sustainable. The AFP Trust Fund Committee shall publish any disposition of assets in a newspaper of general circulation. TITLE III UNIFORMED PERSONNEL SEPARATION, RETIREMENT, AND PENSION SYSTEM CHAPTER I RETIREMENT

SEC. 20. Active Duty. - Service rendered as an officer and non-officer, cadet,

trainee, draftee, probationary ensign or those rendered as a civilian official or employee in the Philippine Government.

SEC. 21. Compulsory Retirement. - All Uniformed Personnel shall be

compulsorily retired from service upon reaching the age of fifty-seven (57) including those in the active duty before the enactment of this Act.

Uniformed Personnel killed-in-action or wounded-in-action resulting in total permanent disability, as duly certified by the appropriate medical certification process, shall be deemed compulsorily retired for purposes of computing retirement benefits.

SEC. 22. Optional Retirement. - Uniformed Personnel may voluntarily retire

upon accumulation of at least twenty (20) years of satisfactory active duty, subject to the approval of the appropriate authority. CHAPTER II BENEFITS

SEC. 23. Retirement Grade and Pay. - The monthly retirement pay shall be fifty

percent (50%) of the monthly base pay and longevity pay of the permanent grade last held by the Uniformed Personnel in case of twenty (20) years in active duty, increasing by two-point five percent (2.5%) for every year of active duty rendered beyond twenty (20) years to a maximum of ninety percent (90%) for thirty-six (36) years of active duty and over. Upon retirement, Uniformed Personnel shall choose between the following modes of payment of retirement benefits: a) Lump Sum - To receive in advance and in one lump sum, retirement benefits equivalent to thirty-six (36) months; and three (3) years thereafter, to receive monthly retirement benefits as they accrue; or b) Direct Pension - To receive monthly retirement benefits as they accrue. The retirement pay of Uniformed Personnel who is killed-in-action or wounded- in-action resulting in total permanent disability, as duly certified by the appropriate medical certification process, shall be computed at the rate of ninety percent (90%) of the monthly base and longevity pay of the retirement grade of the personnel regardless of years in active duty.

SEC. 24. Separation Pay. - Uniformed Personnel who separate or resign from

the service without reaching twenty (20) years of satisfactory active duty shall receive a separation pay equivalent to one-month base pay plus longevity pay of the permanent grade held at the time of separation for every year of active duty: Provided,

1 That such Uniformed Personnel shall have rendered at least nine (9) years of satisfactory active duty prior to resignation or separation.

SEC. 25. Survivorship Pension Rates. - The survivorship pension rates of

Uniformed Personnel shall be governed by existing laws and regulations created therefor.

SEC. 26. Adjustments in Pension. - There shall be no automatic adjustment of

pension to the prevailing scale of salary of the active Uniformed Personnel of the same rank: Provided, That the President of the Philippines is hereby authorized, subject to the recommendation of the Uniformed Personnel Trust Fund Committee created under this Act, to adjust the retirement and survivorship pension by not less than one-point five percent (1.5%) thereof, in consideration of fiscal or economic conditions, as certified by the Development Budget Coordination Committee.

SEC. 27. Harmonization of Total Permanent Disability Benefits. - Uniformed

Personnel with total permanent disability as a result of injuries sustained or sickness contracted in the performance of duty, duly certified by the appropriate medical certification process, shall be compulsorily retired.

SEC. 28. Termination of Benefits. - Retired Uniformed Personnel who lose their

Filipino citizenship shall be removed from the retired list and forfeit all rights to receive 23 the benefits herein provided upon such loss. CHAPTER III UNIFORMED PERSONNEL TRUST FUND

SEC. 29. Uniformed Personnel Trust Fund. - The Uniformed Personnel Trust

Fund is hereby created for the budgetary support and payment of separation, retirement, pension, survivorship, and other benefits granted under this Act. The Uniformed Personnel Trust Fund is separate and distinct and should not be commingled with the GSIS funds. The GSIS shall not advance funds and grant any

form of loans to the Uniformed Personnel Trust Fund Committee from the GSIS administered funds.

SEC. 30. Funding Source. - The Uniformed Personnel Trust Fund shall be

funded through the following: a) Mandatory Contributions. - Uniformed Personnel shall contribute nine percent (9%) of their monthly base pay and longevity pay as personal share and the National Government shali contribute twelve percent (12%) as its counterpart share: Provided, That both the aforementioned rates may be adjusted by the Development Budget Coordination Committee, in consultation with the Uniformed Personnel Trust Fund Committee, on account of adverse fiscal or economic conditions or the fiscal constraints of the National Government; and b) Earnings and dividends from investment made by the GSIS as the fund manager.

SEC. 31. Uniformed Personnel Trust Fund Committee. - To carry out the

declared policy of this Act, the Uniformed Personnel Trust Fund Committee is hereby created. The Trust Fund Committee shall be organized within ninety (90) days from the effectivity of this Act. It shall be composed of the following members: a) Secretary of Finance as Chairperson; b) Chief of the PNP; c) Chief of the BFP; d) Chief of the BJMP; e) Director General of BuCor; f) Commandant of PCG; g) Director of the Hydrography Branch of NAMRIA; h) Secretary of Budget and Management; and i) President and General Manager of the Government Service Insurance System (GSIS). Provided, That the participation of representatives of the Uniformed Personnel in deliberations and decision-making processes of the Trust Fund Committee shall be limited to the matters concerning their respective service.

The Bureau of the Treasury shall serve as the Secretariat of the Trust Fund Committee and maintain the records and accounts of all investments, receipts, disbursements, and other transactions relating to the management, administration, and utilization of the Uniformed Personnel Trust Fund: Provided, That these records and accounts are maintained in accordance with the existing accounting and auditing laws, rules and regulations, and audited by the COA.

SEC. 32. Powers and Functions of the Trust Fund Committee. - The Uniformed

9 Personnel Trust Fund Committee shall exercise the following powers and functions: a) Formulate policies, guidelines and programs to ensure that the fund is actuarially and financially optimal and sustainable; b) Act as Trustee of the Uniformed Personnel Trust Fund; c) Perform oversight functions over the fund manager; d) Provide the proper mechanisms for consultation and information dissemination among members regarding the management, utilization, investment, and administration of funds; e) Commission an actuarial evaluation of the fiscal sustainability of the separation, retirement and pension scheme, including specific recommendations on the rates for contributions and investment options for the Uniformed Personnel Trust Fund, as applicable; f) Obtain information from any officer or office of local governments and agencies and instrumentalities of the National Government, as may be necessary; g) Assess possible risks to the fiscal sustainability of the pension of Uniformed Personnel and propose appropriate policy interventions; h) Identify, manage, and control risks that the pension of the Uniformed Personnel may pose to the National Government's fiscal position; i) Inform both Houses of Congress of such risks through the annual Fiscal Risk Statement and propose legislative reforms to address such risks; and j) Perform other necessary functions for the effective management of the Uniformed Personnel Trust Fund.

TITLE IV MANAGEMENT OF TRUST FUNDS

SEC. 33. Manager of Trust Funds. - The GSIS is hereby designated as the fund

manager of AFP and Uniformed Personnel Trust Funds, and shall: a) Implement an investment management strategy as directed by the Committees; b) Monitor market and economic trends and track securities to make informed investment decisions that would be beneficial to the continued growth and sustainability of the trust funds; c) Present and report its portfolio strategy to the Committees; d) Design and implement programs that will promote and mobilize earnings, savings and additional resources for social security expansion and afford individual members appropriate returns on their savings/investments; e) Conduct continuing actuarial and statistical studies and valuations to determine the financial condition of the trust funds and taking into consideration such studies and valuations, recommend to the Committees the adjustment of benefits, contributions, interest rates or the allocation of the funds to the contingencies covered; f) Track financial results of companies in the portfolio and its various metrics, including price-to-earnings ratios, inflation-adjusted return, sales, earnings, and dividends; and g) Perform other acts necessary to fulfill its mandate under this Act, or such acts that may be delegated by the Committees.

SEC. 34. Structure, Staffing Pattern, and Operating Budget. - The

organizational structure and staffing pattern for the management of the trust funds within the GSIS and for the creation of the Trust Fund Secretariat within the Bureau of the Treasury shall be approved by the Trust Fund Committees within one hundred twenty (120) days from the effectivity of this Act, subject to further extensions as may be approved by the Trust Fund Committees: Provided, That appointees to various positions shall comply with the qualification standards approved by the Civil Service Commission: Provided, further, That the GSIS shall be entitled to reasonable annual

management fees but shall not exceed one percent (1%) of the total assets managed in each trust fund charged against the respective Trust Funds.

SEC. 35. Tax Treatment of the AFP and Uniformed Personnel Trust Funds. -

Notwithstanding any law to the contrary, the trust funds, its assets, revenues, including all accruals thereto, and benefits paid, are exempt from all taxes, assessments, fees, charges, or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked. Subject to Section 41 of this Act, the trust funds, the properties of the Military identified by the AFP Trust Fund Committee to be disposed and sums or monies for the payment of the benefits provided under this Act are exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies and from all financial obligations of the members, including pecuniary accountability arising from or caused or occasioned by the members' exercise or performance of official functions or duties, or incurred relative to or in connection with the members' position or work except when the monetary liability, contractual or otherwise, is in favor of the trust funds. All other applicable tax exemptions granted to the GSIS shall also apply to the trust funds.

SEC. 36. Government Guarantee. - The government of the Republic of the

Philippines hereby guarantees the fulfillment of the obligations of the trust funds to its members when they fall due. TITLE V MISCELLANEOUS, PENAL, AND FINAL PROVISIONS

SEC. 37. Administration of Benefits. - The powers and functions of units or

instrumentalities of agencies that employ Military or Uniformed Personnel and administer their separation, retirement and pension system or parts thereof shall remain with the existing offices of their respective agencies. The respective services or mother units shall monitor proof of life or life events that will affect the qualification of pensioners and beneficiaries to receive the pension

or benefit. The computation of pension and benefits accruing to each retiree or beneficiary shall be undertaken by the concerned mother unit.

SEC. 38. Adjustments in Salary and Pension Benefits. - Upon the effectivity of

this Act, there shall be a guaranteed annual adjustment in the base pay of three percent (3%) for the next ten (10) years for those in the active duty and pension benefits of the retirees. On the fifth (5th) year, and when the need arises thereafter, there shall be a review on the base pay and the rule on automatic indexation by the Development Budget Coordination Committee.

SEC. 39. Separation, Retirement and Pension Benefits of the Active Military and

Uniformed Personnel. - The separation, retirement and pension benefits of Military or Uniformed Personnel in active duty prior to the effectivity of this Act shall be governed by existing laws and regulations created therefor and shall be funded annually under the General Appropriations Act: Provided, That the maximum retirement pay for active Military or Uniformed Personnel who will compulsorily retire after the effectivity of this Act shall be increased to ninety percent (90%): Provided, further, That the rate of ninety percent (90%) shall also apply to those deemed compulsorily retired by reason of having been killed-in-action or wounded-in-action after the effectivity of this Act resulting in total permanent disability: Provided, finally, That the separation, retirement and pension benefits payable to the Uniformed Personnel from the Bureau of Corrections who were affected by the implementation of Republic Act No. 10575 or the "Bureau of Corrections Act of 2013" and who may or may not have contributed to the GSIS, shall also be covered in full by the General Appropriations Act.

SEC. 40. Medical Insurance. - Military or Uniformed Personnel, who enter the

service after the effectivity of this Act, shall be provided medical insurance upon their compulsory retirement.

SEC. 41. Non-encumbrance of Benefits. - The benefits authorized under this

Act, except as provided herein, shall not be subject to attachment, garnishment, levy, execution or any tax whatsoever, and may not be assigned, ceded, or conveyed to

1 any third person: Provided, That if a retired or separated Military or Uniformed Personnel who is entitled to any benefit under this Act has unsettled money or property accountabilities incurred while in the active duty, an amount not exceeding fifty percent (50%) of the pension gratuity or other payment due to the Military or Uniformed Personnel or their survivors under this Act may be withheld and be applied to settle such accountabilities.

SEC. 42. Rule on Interpretation. - Nothing in this Act shall be construed as

authorizing any downward adjustment of pay, or payment of any differential in retirement pay, to Military or Uniformed Personnel who are already retired prior to the effectivity of this Act.

SEC. 43. Submission of Report to Congress. - In accordance with the pertinent

provisions of this Act and its Implementing Rules and Regulations, and International Financial Reporting Standards and Principles, the Committees shall submit to both Houses of Congress every three (3) years after the effectivity of this Act, the financial statements and reports, and all information as may be required, to monitor and assess the distribution of retirement benefits and pension, as well as the overall performance of Military or Uniformed Trust Funds, which are funded in whole or in part by the National Government.

SEC. 44. Penal Clause. - Any person who participates directly or indirectly in

the commission of fraud, falsification, misrepresentation of facts, collusion or any similar anomaly in the issuance of any certificate or document for any purpose connected with this Act shall, upon conviction, be punished by a fine of not less than the amount defrauded but not more than threefold of such amount or imprisonment of not less than six (6) months and one (1) day to six (6) years and perpetual disqualification from holding public office and from practicing any profession licensed by the government: Provided, That a conviction or acquittal obtained under this section shall not be a bar to the filing of an administrative, civil, or criminal case under existing laws.

SEC. 45. Implementing Rules and Regulations. - Within sixty (60) days from

the effectivity of this Act, the Secretaries of Finance, National Defense, Interior and Local Government, Justice, Transportation, Environment and Natural Resources, Budget and Management, and the President and General Manager of the GSIS, in consultation with the concerned Military or Uniformed Services, shall promulgate the necessary rules and regulations for the effective implementation of this Act: Provided, That the non-promulgation of the implementing rules and regulations shall not prevent the implementation of this Act upon effectivity. Supplemental rules and regulations governing the management and administration of the pension system of the Military or Uniformed Personnel may be issued within one (1) year from the effectivity of this Act.

SEC. 46. Separability Clause. - If any provision or part of this Act is declared

invalid or unconstitutional, the remaining parts or provisions not affected shall remain in full force and effect.

SEC. 47. Repealing Clause. - The pertinent provisions of these laws are hereby

repealed, amended, or modified accordingly. a) Section 11 of Republic Act No. 340, as amended, entitled "An Act to Establish a Uniform Retirement System for the Armed Forces of the Philippines, to Provide for Separation Therefrom, and for Other Purposes; b) Sections 2(b), 3, 5, 11, 12, 14, 16, 17, 18, 19, 20, and 22 of Republic Act No. 5976, otherwise known as the "Coast Survey Officers Retirement and Separation Act of 1969"; c) Sections 5, 17, and 26 of Presidential Decree No. 1638, entitled "Establishing a New System of Retirement and Separation for Military Personnel of the Armed Forces of the Philippines and for Other Purposes," as amended by Presidential Decree No. 1650; d) Presidential Decree No. 361, entitled "Providing for an Armed Forces Retirement and Separation Benefits System," as amended by Presidential Decree No. 1656 and Presidential Decree No. 1909; e) Section 39 of Republic Act No. 6975, otherwise known as the "Department of the Interior and Local Government Act of 1990";

f) Section 3 of Republic Act No. 8291, as amended, otherwise known as "The Government Service Insurance System Act of 1997"; g) Sections 4 and 5 of Republic Act No. 9040, otherwise known as "The AFP Tax Exemption for Pay and Allowances Act of 2001"; h) Sections 17 and 18 of Republic Act No. 9993, otherwise known as the "Philippine Coast Guard Law of 2009"; i) Sections 2 and 24 of Republic Act No. 10575, otherwise known as the "Bureau of Corrections Act of 2013"; and j) Section 8 of Republic Act No. 11709, as amended, entitled "An Act Strengthening Professionalism and Promoting the Continuity of Policies and Modernization Initiatives of the Armed Forces of the Philippines, by Prescribing Fixed Terms for Key Officers Thereof, Increasing the Mandatory Retirement Age of Generals/Flag Officers, Providing for a More Effective Attrition System, and Providing Funds Therefor." All other laws, rules, and regulations, and other issuances or parts thereof, which are inconsistent with the provisions of this Act, are hereby repealed, amended, or modified accordingly.

SEC. 48. Effectivity. - This Act shall take effect after fifteen (15) days following

the completion of its publication in the Official Gazette or in a newspaper of general circulation. Approved,