Providing For An Armed Forces Retirement And Separation Benefits System

Case Overview and Summary

Summary of Presidential Decree No. 361

Establishment of the Armed Forces Retirement and Separation Benefits System (Section 1):
- A system for payment of retirement and separation benefits to military members of the Armed Forces of the Philippines is established.

Funding of the System (Section 2):
- The System shall be funded through:
• Appropriations and contributions.
• Donations, gifts, legacies, bequests, and others.
• All earnings of the System, which shall not be subject to any tax.

Initial Funding (Section 3):
- The sum of 200 million pesos shall be paid to the System in four equal annual payments out of the Treasury funds, with the first remittance in July 1974.

Contributions from Active Personnel (Section 4):
- Officers and enlisted personnel in active service shall contribute an amount equivalent to 4% of their monthly base and longevity pay, deducted from their pay.
- Exemptions:
• Those due for compulsory retirement or optionally retirable and electing to retire within one year from the approval of the Act are not required to contribute. (Section 4)
• Those separated through no fault of their own and not eligible for retirement or separation benefits shall be refunded their actual contributions plus 4% interest upon separation. (Section 4)

Funding for Existing Retirees and Exempted Personnel (Section 5):
- Retirement and separation gratuity payments for those already retired at the time of the Act's effectivity, and those exempted from contributing under Section 4, shall be funded through annual appropriations for the Armed Forces of the Philippines.
- If the total cash requirement for such payments exceeds 100 million pesos in any year, the excess shall be borne out of the System's funds after four years from the Act's approval.

Administration and Investment (Section 6):
- The System shall be administered by the Chief of Staff of the Armed Forces of the Philippines through an agency, group, committee, or board created and organized by him, subject to rules and regulations promulgated with the approval of the Secretary of National Defense.
- Investment of the System's funds shall be decided by the Chief of Staff of the Armed Forces of the Philippines with the approval of the Secretary of National Defense.

Effectivity (Section 7):
- The Act shall take effect upon its approval.