Law Summary
Introduction
Executive Order No. 590, issued on December 15, 2006, establishes the deactivation of the Armed Forces of the Philippines Retirement and Separation Benefits System (RSBS) effective December 31, 2006. This Order outlines the transfer of RSBS assets, creation of oversight committees, and the establishment of a new retirement system for military personnel.
Deactivation of RSBS
- Provision: The RSBS is officially deactivated, ceasing all operations on December 31, 2006.
- Objective: To address the inadequacies of the RSBS, which has been deemed fundamentally flawed and unable to achieve self-sufficiency for military retirement benefits.
Creation of Cabinet Oversight Committee
- Provision: A Cabinet Oversight Committee (COC-RSBS) is formed to oversee the liquidation of RSBS assets and winding down of operations.
- Composition: The committee is to include the Secretary of National Defense, Secretary of Finance, Secretary of Budget and Management, Chief of Staff of the AFP, and a representative from the President’s office.
Specific Guidelines for Deactivation and Liquidation
- Due Diligence: The Secretary of National Defense, in coordination with the Secretary of Finance, is directed to conduct a due diligence review of RSBS books as of June 30, 2006, to ascertain the financial condition of the system.
- Asset Transfer:
- Current assets will be transferred to a Government Financial Institution (GFI) such as the Development Bank of the Philippines or the Land Bank of the Philippines.
- The GFI will manage the liquidation of these assets.
- Trust Account: Proceeds from asset sales and mandatory contributions from military personnel will be placed in a Trust Account managed by the GFI.
Return of Members’ Contributions
- Provision: Contributions of military personnel will be returned with a 6% interest to retired personnel from the funds in the Trust Account, guaranteed by the National Government.
Separation or Retirement of RSBS Personnel
- Provision: Personnel affected by RSBS deactivation will be retired or separated according to Republic Act No. 6656, ensuring security of tenure.
- Compliance: Implementation must adhere to the Salary Standardization Law (Republic Act No. 6758).
Assistance by the Government Corporate Counsel
- Provision: The Office of the Government Corporate Counsel (OGCC) is tasked to assist the Cabinet Oversight Committee and the GFI Trustee with legal matters regarding RSBS deactivation.
New Philippine Military Retirement System
- Provision: The Department of National Defense (DND) must draft legislation for a new retirement and pension system for military personnel, with specific investment guidelines.
- Applicability: The new system will apply only to new recruits entering military service after its enactment.
Effectivity
- Provision: The Executive Order takes effect immediately upon its issuance.
Key Takeaways
- The RSBS is deactivated as of December 31, 2006, due to its inability to provide sustainable retirement benefits.
- A Cabinet Oversight Committee will manage the liquidation process, and personnel contributions will be returned with interest.
- The DND is directed to develop a new military retirement system focused on future recruits.
- Legal support will be provided by the OGCC to ensure compliance with the deactivation process.
This comprehensive summary outlines the significant provisions and implications of Executive Order No. 590 regarding the deactivation of the RSBS and the establishment of a new military retirement system.