DOF mulls rehab of AFP-RSBS

Officials of the Department of Finance (DOF) and the Department of National Defense (DND) have been meeting to discuss the possible rehabilitation of the bankrupt Retirement and Separation Benefit System of the Armed Forces of the Philippines (AFP-RSBS).

Thousands of army soldiers and officers lost their lifetime savings when the RSBS went bankrupt because of bad and fraudulent loans.

Finance Secretary Jose Isidro Camacho disclosed that a joint task force of DOF and DND officials has been formed to make an evaluation of the existing assets of the fund, and to devise an actuarial system to assure the financial viability of the institution.

He, however, ruled out a government dole to AFP retirees and pensioners, saying that their annual contributions cannot be sustained through the years.

"The government has been pumping money into the AFP-RSBS because the contributions of its members are to be returned with interest at the end of their service. Unless we have a clear plan on how to do this, the government has no option but to continue pumping money into the system, and that is not sustainable," remarked Camacho.

However, Finance Undersecretary Nieves Osorio revealed that the World Bank is willing to underwrite the pension and retirement fund by extending grants amounting to $250,000 or some P13 million.

According to the DOF, some 80 percent of the fund’s assets are tied up in real estate and golf courses that were the result of lending activities that turned sour when real estate prices fell in 1997.

Officials said the military amortizes an estimated P61 million worth of obligations a month even as revenues are already minimal, in a financial statement filed in 1999, RSBS revealed that its assets sharply diminished to only P14.9 billion from P15.9 billion a year earlier.

Its revenues plummeted to only P110 million in 1999 or almost 80-percent lower than revenue a year earlier totaling 519 million.

Camacho said that there is a proposal to convert the AFP-RSBS into a fund operated like the Social Security System.