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Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs

to the Transition Assistance Program (TAPS)


1

TABLE OF CONTENTS
CHAPTER I........................................................2

1.1 BACKGROUND.............................................................2
1.2 STATEMENT OF THE PROBLEM..........................4
1.3 IMPORTANCE OF THE STUDY..............................7
1.4 SCOPE AND LIMITATION........................................8
1.5 DEFINITION OF TERMS...........................................9

CHAPTER II.....................................................10

2.1 REVIEW OF RELATED LITERATURE..............10


2.2 REVIEW OF RELATED FOREIGN STUDIES...11
2.3 REVIEW OF RELATED LOCAL STUDIES........13

CHAPTER III...................................................14

3.1 RESEARCH DESIGN.................................................14


3.2 DATA GATHERING PROCEDURES....................15
3.3 RESEARCH SETTING..............................................16
3.4 INSTRUMENTS.........................................................17
3.5 METHOD AND PROCEDURE...............................17
3.6 TREATMENT OF DATA.........................................18
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
2

CHAPTER I
1.1 BACKGROUND

Personnel management plays a significant role in any organization,


especially so when such organization has a considerable personnel base. In an
organization such as the Armed Forces of the Philippines (AFP), matters involving
personnel management like recruitment and promotion, compensation and
benefits, seniority, morale and discipline, retirement, and separation affect their
efficiency and effectiveness in the performance of their duties. The interplay of
these factors contributes to career decisions on the part of the military personnel.
Some of these factors are purely independent from the AFP, but which affect
their decisions just the same. One of such considerations is government’s move to
modify retirement and separation benefits of the AFP. As early as 2006, when
thru Executive Order 590 which dissolved the AFP Retirement and Separation
Benefit System (RSBS), government had realized a looming problem in the existing
laws on the AFP retirement and separation system. However, it was only in 2016
that the Department of Budget and Management (DBM) gave its full attention in
restructuring the same. The DBM cautioned about the ballooning figure of AFP
pensioners. According to the DBM, 60% of the AFP’s budget goes to its pension
fund.[CITATION May18 \l 1033 ] As such, there are a number of senior Enlisted
Personnel especially those about to reach retiring age that would consider cutting
short their careers and opting to file for retirement. Thus, when the Actual Troop
Size as projected by the AFP among its senior Enlisted Personnel is depleted,
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
3

there could be issues regarding morale and performance of personnel as well as


mission delivery.

Another prevailing issue related to AFP personnel management is the


positive and active organizational measures of the AFP like the strict
implementation of the Lateral Attrition Law under Presidential Decree № 1638. Its
implementation could cause the premature retirement of military professionals
who were mostly the recipient of additional logistics, education and training
support from the AFP. Their premature retirement could deny the AFP the full
recompense for the economic utilization of the resources given them. It is
beneficial for the AFP to retain these military professionals for optimum
utilization of their services who have proven leadership and competence.

When all of these are taken into consideration, these add up to the general
pervading attitude of uncertainty among senior Enlisted Personnel when it
pertains to continuing their military life in the Active Force. Currently, the AFP has
maximized the actual troop ceiling for its Active Force. However, the
abovementioned concerns could disrupt this continuity and balance within the
ranks, causing major gaps to its deliverables in the degree comparable to a
national security issue.

A look on the annual troop structure of the AFP over the years would reveal
a tapering in terms of number of senior Enlisted Personnel from the base to the
top. With the interplay of personnel management concepts as well as intervening
factors, almost a third of the AFP recruitment quota reach senior Enlisted
Personnel grade. This could worsen on the part of the AFP very quickly if not
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
4

addressed accordingly. The AFP could be looking at a deficiency of competent


personnel who are trained and educated in the supervisorial level.

In order to better appreciate the modalities in connection with the enlisting


to the Active Force and climbing up the ranks as senior Enlisted Personnel of the
AFP, one should be acquainted with the laws and decrees of the AFP related to
promotion and separation. As it stands right now, direct enlistment to the Active
Force of the AFP is made by the Commanders of the Major Services, subject only
to the rules and regulations prescribed by the Chief of Staff, AFP; provided further
that the actual troop strength is based on the authorized recruitment ceiling in
the General Appropriations Act. Upon enlistment, certain standards are followed
in order that they maintain competent, efficient, as well as morally and physically
fit. They retain their fitness to be in the Active Force of the AFP under Republic
Act № 291, otherwise known as the “Armed Forces Personnel Act of 1948.” This
along with several other laws pertaining to the Active Force governs the
administration of personnel in the AFP.

As it appears now, the Military and Uniformed Services Personnel


Separation, Retirement and Pension Bill pending before Congress would modify
dramatically how AFP personnel would progress in their military career. Its effect
on many senior Enlisted Personnel would be like forcing them to reconsider
retirement instead of optimum career development in the AFP. Is this the general
sentiment of many senior Enlisted Personnel who stands to be affected by said
pending bill or just a sentiment carried by a limited number of AFP personnel who
are used to the same old separation, retirement and pension system? These are
several issues which this paper would be resolving.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
5

1.2 STATEMENT OF THE PROBLEM

The possible changes to the Military and Uniformed Services Personnel


Separation, Retirement and Pension Laws poses a direct influence in the future
career consideration of Enlisted Personnel of the AFP. This paper then realizes the
need to evaluate the junior and senior Enlisted Personnel inside Camp General
Emilio Aguinaldo, who are the representative class of all the Enlisted Personnel in
the AFP. This is done with the end view of instituting a clear Separation,
Retirement and Pension system for those who will be affected and for AFP
decision makers to address the impending issue with personnel sustainability and
provide a support system for those Enlisted Personnel affected by the same.

Furthermore, this paper will answer the following specific questions: 1)


what is the profile of the respondents in terms of the causal variables of Age, Sex,
Rank, and Ethnicity? 2) What is the mean level of evaluation between the junior
and senior Enlisted Personnel? 3) Is there a significant difference between the
evaluation of the respondents in terms of Age, Sex, Rank, and Ethnicity?

In terms of Age, this factor could be a determinant to the end result of this
paper, as every respondent nears the retirement age or when other variables
influence their decision. As to Sex, there is no perceivable outcome influence of
this factor. However, this paper will be careful when it comes to frequency and
depth of range based on the pre-testing results. Rank on the other hand has
direct proportional relationship with retirement as one goes up in rank.
Moreover, the causal determinant of ethnicity could also be determined during
the progress of this paper, discussed particularly in Chapter IV herein.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
6

The mean level of evaluation between the two (2) groups of respondents is
ninety (90) percent. This means that 90% of the time that this research is
conducted to the same group, the result would be the same 9/10 times. This will
be discussed in the presentation of data, analysis, and findings from the data in
Chapter IV of this paper.

This paper follows a descriptive and comparative research question. Hence,


comparing the two (2) groups after exposure to the causal variables of Age, Sex,
Rank, and Ethnicity, could point out a significant difference on their results. Thus,
the results for the comparison of the independent variable (i.e. retirement and
separation of Enlisted Personnel) and the causal variables of Age, Sex, Rank, and
Ethnicity could best be answered after the conduct of the pre-testing.
Nevertheless, the causal variables have been considered in this paper as its null
hypothesis.

There have been many changes and developments that transpired since the
passage of the AFP Personnel Management Act of 1948. There were several
legislations modifying, in effect, the provisions of said law. With the increasing
number of AFP pensioners, which most of their benefits are being taken annually
from the General Appropriations Act for the AFP, a pension crisis is very possible.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
7

Figure 1. Actual Number of AFP Retirees, 2005-20101

The AFP Pe nsio n Sy st e m


At A Gl a n ce
January 2012 AG-12-01

The Arm e d F orces of t he Philippines Ret irem e nt and Se parat ion Be ne f it s Syst e m (AF P-RSBS) w as est ablished on
Dece m ber 30, 1973 by virt ue of Pre side nt ial De cre e (PD) No. 361, as am e nded by PD 1656, t o provide re t irem ent
and se parat ion be ne f it s t o t he m ilit ary m em bers of t he AF P. Howe ve r, be cause it f aile d on it s m andat e to
be com e a self -sust aining m ilit ary pension f und, t he AF P-RSBS w as eve nt ually dissolve d on De ce m be r 31, 2006
t hru Exe cut ive Order No. 590. W it h t he grow ing num be r of pe nsioners and t heir be nef it s cont inuously being
f ully f unde d out of t he annual appropriat ions f or t he AF P, f ears of a loom ing pe nsion crisis is now grow ing.
Base d on re cords of t he AF P Pe nsion and Grat uit y M anagem e nt C e nt er (AFP-PGMC ), t he governm e nt has yet t o
pay pe nsion arre ars am ount ing t o PhP16 billion f or alm ost 112,000 m ilit ary personnel.

AF P Re t ire e s. Of the total number of Table 1. Actual Numbe r o f AFP Re tire e s, 2005 -2010
retirees from the different service units Branch o f Se rvice 2005 20 06 2007 2008 2009 2010
of the AFP, those from the Philippine
Army account for more than half (67.4%) Phil. Army 3,097 3,509 4,431 3,259 3 ,599 3,097
while the Philippine Air Force and the Phil. Air Force 763 1,032 879 772 721 720
Philippine Navy account for 15.7% and
Phil. Navy 888 1,110 1,128 1,191 1 ,084 682
14.8%, respectively. The Technical
Tech. Admin. Service 88 103 99 81 88 95
Administrative Service, which includes
the personnel from the General Total 4,836 5,754 6,537 5,303 5 ,492 4,594
Headquarters Proper, the AFP Medical Source of basic dat a: AFP-PGMC

Center, the Philippine Military Academy


and the Presidential Security Group, has
the lowest share at only 2.1%. From
2005 to 2010, an average of 5,419
military men retired every year. Based
on the projections of the AFP-PGMC,
about 6,000 personnel will retire
annually from 2011 to 20181 .

AF P pe nsione rs. With the constant slew


of military men retiring every year, the
Source : AFP-PGMC
number of pensioners in the AFP
continuously increased. From 2005 to
F i g u r e 2 . N u m b e r o f A F P P e n s i o n e r s v s . P e r s o n n e l
2010, the pace of growth in the number
2 0 0 , 0 0 0
i n A c t i v e S e r v i c e , 2 0 0 5 - 2 0 1 0
of AFP pensioners even exceeded the
growth rate of AFP personnel in active 1 5 1 , 2 5 6
1 3 3 , 9 7 9 1 2 9 , 8 0 9 1 2 9 , 8 6 5 1 3 1 , 5 0 6 1 3 3 , 8 5 5
1 5 0 , 0 0 0
service. While pensioners grew by an 1 0 6 , 9 1 0 1 1 1 , 4 0 4
9 7 , 7 8 9 9 8 , 9 2 8 1 0 1 , 0 0 3 1 0 1 , 7 9 7
annual average of 2.65%, the average 1 0 0 , 0 0 0
annual growth rate of the number of
active personnel declined by 2.29% 5 0 , 0 0 0
during the said period. However,
starting 2008, the number of personnel 0

in active service has started increasing 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0


N u m b e r o f p e n s io n e r s N u m b e r o f p e r s o n n e l i n a c t iv e s e r v ic e
again.
Source : AFP-PGMC

1
This includes the retirees under Section 4 and Section 5 (a) of PD 1638. Section 4 is an optional retirement for uniformed
personnel who have rendered at least 2 0 years of active service while Section 5(a) is compulsory retirement for uniformed
personnel at the age of 60 and have rendered at least 15 years of ac tive s ervice.

Considering the total number of retirees from the major services of the
AFP, 67% or more than half of those are from the Philippine Army while the
Philippine Air Force and Philippine Navy account for 16% and 15%, respectively.
The Technical or Support Services, to which personnel from the General
Headquarters, AFP Medical Center, Philippine Military Academy, and Presidential
Security Group are included, has the lowest figure at 2%.

Figure 2. Projected Number of Retirees (2011-2018)2

The AFP Pe nsio n Sy st e m


At A Gl a n ce
January 2012 AG-12-01

The Arm e d F orce s of t he Philippine s Re t irem e nt and Se parat ion Be ne fit s Syst e m (AF P-RSBS) w as e st ablishe d on
De ce m ber 30, 1973 by virt ue of Pre side nt ial De cre e (PD) No. 361, as am e nde d by PD 1656, t o provide re t irem e nt
and se parat ion be ne fit s t o t he m ilit ary m e m bers of t he AF P. Howe ve r, be cause it faile d on it s m andat e to
be com e a se lf -sust aining m ilit ary pe nsion fund, t he AF P-RSBS w as e ve nt ually dissolve d on De ce m be r 31, 2006
t hru Exe cut ive Order No. 590. W it h t he grow ing num be r of pe nsione rs and t he ir be ne f it s cont inuously be ing
fully funde d out of t he annual appropriat ions for t he AF P, fe ars of a loom ing pe nsion crisis is now grow ing.
Base d on re cords of t he AF P Pe nsion and Grat uit y Manage m e nt Ce nt e r (AF P-PGMC ), t he gove rnm e nt has ye t t o
pay pe nsion arre ars am ount ing t o PhP16 billion for alm ost 112,000 m ilit ary personne l.

AF P Re t ire e s. Of the total number of Table 1. Actual Numbe r o f AFP Re tire e s, 2005 -2010
retirees from the different service units Branch o f Se rvice 2005 20 06 2007 20 08 2009 2010
of the AFP, those from the Philippine
Army account for more than half (67.4%) Phil. Army 3,097 3,509 4,431 3,259 3,599 3,097
while the Philippine Air Force and the Phil. Air Force 763 1,032 879 772 721 720
Philippine Navy account for 15.7% and
Phil. Navy 888 1,110 1,128 1,191 1,084 682
14.8%, respectively. The Technical
Tech. Admin. Service 88 103 99 81 88 95
Administrative Service, which includes
the personnel from the General Total 4,836 5,754 6,537 5 ,303 5 ,492 4 ,594
Headquarters Proper, the AFP Medical Source of basic dat a: AFP-PGMC

Center, the Philippine Military Academy


and the Presidential Security Group, has
the lowest share at only 2.1%. From
2005 to 2010, an average of 5,419
military men retired every year. Based
on the projections of the AFP-PGMC,
about 6,000 personnel will retire
annually from 2011 to 20181 .

AF P pe nsio ne rs. With the constant slew


of military men retiring every year, the
Source: AFP-PGMC
number of pensioners in the AFP
continuously increased. From 2005 to
F i g u re 2 . N u m b e r o f A F P P e n s i o n e r s v s . P e rs o n n e l
2010, the pace of growth in the number
2 0 0 , 0 0 0 i n A c t i v e S e rv i c e , 2 0 0 5 - 2 0 1 0
of AFP pensioners even exceeded the
growth rate of AFP personnel in active 1 5 1 , 2 5 6
1 3 3 , 9 7 9 1 2 9 , 8 0 9 1 2 9 , 8 6 5 1 3 1 , 5 0 6 1 3 3 , 8 5 5
1 5 0 , 0 0 0
service. While pensioners grew by an 1 0 6 , 9 1 0 1 1 1 , 4 0 4
9 7 , 7 8 9 9 8 , 9 2 8 1 0 1 , 0 0 3 1 0 1 , 7 9 7
annual average of 2.65%, the average 1 0 0 , 0 0 0
annual growth rate of the number of
active personnel declined by 2.29% 5 0 , 0 0 0
during the said period. However,
starting 2008, the number of personnel 0
in active service has started increasing 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0
N u m b e r o f p e n s io n e r s N u m b e r o f p e r s o n n e l i n a c t iv e s e r v ic e
again.
Source : AFP-PGMC

1
This includes the retirees under Section 4 and Section 5 (a) of PD 1638. Section 4 is an optional retirement for uniformed
personnel who have rendered at least 20 years of active service while Section 5(a) is compulsory retirement for uniformed
personnel at the age of 60 and have rendered at least 15 years of ac tive service.

1
Source: AFP Pension Gratuity Management Center
2
Source: Ibid.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
8

Based on Figure 2, around 6,000 personnel will retire annually. Along with a
regular number of enlisted personnel retiring every year, the number of
pensioners will also continue to increase. Thus, from merely PhP9.7 billion in
2005, the budget for the AFP pension and retirement reached to PhP24.1 billion
in 2011, a 149% increase.

Figure 3. Actual Number of AFP Retirees, 2005-2010 (in billion PhP) 3

The AF P Pe nsion Budge t . Table 2. Actual Numbe r o f AFP Re tire e s, 2005-2010 (in billio n PhP)
Accordingly, from merely PhP9.7 20 05 2006 2007 2008 2009 2010
AFP Budge t fo r Pe rso nne l
billion in 2005, the budget for
in Active Se rvice 35.9 35.8 36.3 36.7 41.6 42.6
military pension and retirement Phil. Army 20.1 20.1 21.9 22.2 25.5 25.6
benefits ballooned to PhP24.1 Phil. Air Force 4.6 4.4 4.9 4.9 5.5 5.5
billion in 2011, a 149% increase in a Phil. Navy 6.5 6.7 7.1 7.5 8.2 9.1
span of seven (7) years. Tech. Admin. Service 4.7 4.7 2.4 2.1 2.4 2.4
AFP Budge t fo r Pe nsio n 9.7 10.0 11.4 13.5 15.9 19.4
While the annual budget for those and Re tire me nt Be ne fits
Phil. Army 5.9 6.1 7.7 8.2 10.4 13.0
in active service grew by a yearly
Phil. Air Force 1.7 1.8 1.5 2.0 2.1 3.1
average of 3.6% or about PhP1.3
Phil. Navy 1.8 1.9 1.9 3.0 3.2 2.9
billion from 2005 to 2010, the Tech. Admin. Service 0.2 0.2 0.2 0.3 0.3 0.4
allocation for pensioners increased
Source : AFP-PGMC
by an annual average rate of 15.1%
or by PhP1.9 billion every year. F ig u re 3 . P ro je c t e d P e n s i o n v s . A c t iv e M ilit a ry P a y ,
Source: AFP- GCM C
1 5 0 2 0 1 1 - 2 0 2 6 ( in b illio n P h P )
It is projected that the budget for
AFP pensioners will overtake the
1 0 0
salary allocation for active
servicemen by 2017. On the said
year, pension pay is expected to 5 0
amount to PhP54.1 billion
compared to the salary of active
military personnel which is 0

estimated at PhP51.9 billion. 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5 2 0 2 6


S a l a r i e s P e n s i o n
Source : AFP-PGMC

Se parat ion a nd Re t ire me nt Be ne fit s. At present, an amount equivalent to five percent (5%) of their monthly
base pay is automatically deducted from the salaries of all active officers and enlisted personnel of the AFP.
Upon a personnel’s separation or retirement from the service, he or she is refunded in one lump sum all of his
or her contributions2 .

PD 1638 otherwise known as the AFP Retirement Law of 1979 also provides that when an AFP officer or
enlisted personnel is retired from the AFP, he or she shall, at his or her option, receive a gratuity equivalent to
one (1) month of base and longevity pay of the grade next higher than the permanent grade he or she last held
for every year of service. This gratuity is payable in one (1) lump sum or a monthly retirement pay, the
equivalent of which is computed as follows:
Mont hly Pe nsion = (Base Pay + Longe vit y Pay) x (2.5 Pe rce nt x Numbe r of Ye ars in Se rvice )

Survivors of AFP officers and enlisted personnel also receive survivorship benefits. In addition, Section 17 of PD
1638 provides that when the salaries of active soldiers increase, the pension of retirees also increase. AFP
pensioners are, thus, also benefiting from the on-going implementation of the Salary Standardization Law III3 .

Re forming t he AF P Pe nsio n Sche me . To reduce the government’s ballooning pension requirements, the AFP
management is currently drafting a proposal which aims to reform the Armed Forces’ retirement scheme and
create the Philippine Military Pension System or the PMPS. The PMPS is envisioned to function as a
government-owned and controlled corporation which will establish a self-reliant funding scheme to guarantee
the payment of benefits of AFP retirees and pensioners. Other reform proposals include the repeal of the
automatic indexation of the pension to the prevailing salaries of active soldiers, the raising of the mandatory
retirement age to 58 from 56, the increase in the minimum years of service to 25 years from 20 years, as well
as the reduction of the survivorship benefit to 50% of a soldier’s pension from the current 75%.

2
By virtue of PD 1656.
3
Passed in 2008, the Salary Standardization Law III increased the salaries of all government employees. The salary
adjustments are to be made in four (4) tranches, the last of which is scheduled in 2012.

Thus, in Figure 3, while the annual budget for those in active service grew
by an annual average of 3.6% or around PhP1.3 billion from 2005 to 2010, the
allocation given to pension pay increased by a yearly average of 15.1% or PhP1.9
billion every year. With the rate that it is going, it is projected that the
appropriation for the AFP pensioners will be more than the salary of personnel in
the active service.

To reduce government’s spending on pension requirements; the DBM is


asking Congress to approve the Military and Uniformed Services Personnel
Separation, Retirement and Pension Bill which aims to reform the AFP’s
3
Source: Ibid.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
9

retirement scheme. This package aims to include the repeal of the automatic
indexation of the pension to the current salaries of active enlisted personnel, the
raising of the mandatory retirement age, the increase in the minimum years of
active military service, as well as the reduction of survivorship benefits.

All of the foregoing considered, will the AFP be facing a great debacle in
terms of loss of valuable, efficient, and competent personnel in the light of recent
efforts to restructure the AFP Personnel Management System and related laws in
order to address “the problem of the ballooning military pension?” [ CITATION Rea \l
1033 ]

If only this paper would state several null hypotheses it would read as
follows: i) there is no significant relationship in the perceptions of the
respondents on the AFP Attrition laws in relation to the issues regarding their
foresight or decision toward their future; ii) there is no significant relationship in
the perceptions of the respondents in relation to their career progression; and iii)
there is no significant relationship in the ranks of the senior Enlisted personnel
and the junior Enlisted Personnel in identified factors affecting career
progression.

1.3 IMPORTANCE OF THE STUDY

Every Enlisted personnel of the AFP desires to progress in rank because the
higher one gets so is the salary he or she receives. As such, having a clear career
path is one of the most important aspects in the life of an Enlisted Personnel. In
fact, all the areas of personnel management directly affect their military careers.
Uncertainty in whatever area of personnel management could lead to problems
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
10

on performance and morale. With President Rodrigo Roa Duterte signifying to


Congress the urgency of the Military and Uniformed Services Personnel
Separation, Retirement and Pension Bill, [CITATION Dut19 \l 1033 ] there could be a
significant number of Enlisted Personnel considering early retirement in order to
avoid the measures in the proposed bill. Those Enlisted Personnel considering this
option could belong to the AFP’s senior ranks of Enlisted Personnel, which the
AFP has developed and trained to become efficient and competent military
professionals. These Enlisted Personnel could leave a gap in terms of supervisorial
direction in the lower ranks of Enlisted Personnel. If this is so, the AFP could be
staring at a national security concern at that sort when not addressed accordingly.

On the side of government financial managers, the cost of the AFP pension
“rapidly and significantly increases yearly, which results in a fiscal burden with
constant claims against the government budget” [ CITATION Dut19 \l 1033 ] could be
resolved by “rationalization of the pension system of existing personnel, as well as
new entrants to the service.”[ CITATION Dut19 \l 1033 ] According to Budget Secretary
Benjamin Diokno, almost 60% of the AFP goes to the pension of retired AFP
personnel. He said that around PhP90-billion a year goes to the budget for retired
AFP personnel. He warned that if is not curbed “this will balloon into such a mess
that maybe half of our budget goes to the military.”[CITATION Dep17 \l 1033 ]

Another determination for this paper is the degree of awareness of every


respondent on the developments with regard to the Military and Uniformed
Services Personnel Separation, Retirement and Pension Bill vis-à-vis their level of
foresight that could affect their future decision. Hence, it follows logically that
there should be a determination also of respondents’ understanding or level of
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
11

awareness and whether the former is influenced by the respondents’ rank, age, or
personal circumstances.

This paper also determined some of the factors that affect the
implementation of some related laws pertaining to personnel management in the
AFP with the hopes of providing options and recommendations that will help
improve the administration of a self-sustaining retirement and separation benefit
system. This paper will endeavor to find other possible win-win solutions to the
debacle the AFP and its personnel could be facing to conform to the present
needs and realities. It is thus an imperative to avoid such a situation from
worsening or just yet lessen the impact from the proposed changes to the AFP
pension system. This paper, hence, seeks to provide a comprehensive Transition
Assistance Program (TAP) for those Enlisted Personnel who would be affected in
the coming months, if not years.

1.4 SCOPE AND LIMITATION

The distinct respondents for this paper are the junior Enlisted Personnel of
the AFP, which holds the salary grade between E-1 and E-4, and the senior
Enlisted Personnel from E-5 to E-9. This would be further limited to those
assigned within Camp General Emilio Aguinaldo. As it stands, there are a total of
125,543 Enlisted Personnel of the AFP. This target population will be trimmed
down based on the geo-location where the researcher would have easier access
to the respondents, which is in Camp General Emilio Aguinaldo. In terms of
profile, the junior Enlisted Personnel are the workhorses of the AFP. They
comprise the largest number of personnel. On the other hand, the senior Enlisted
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
12

Personnel are regarded as the supervisors of the rank-and-file personnel. They


are also the most trained and skilled in their respective field of expertise.

Figure 4. Matrix of Enlisted Personnel per Rank Distribution 4

This paper focused on the news articles and bi-weekly meetings of


members of the Inter-Agency Technical Working Group on the Military and
Uniformed Services Personnel Separation, Retirement and Pension Bill led by the
Department of Finance and the Bureau of Treasury. After confirmation from
Defense Secretary Delfin Lorenzana of the existence of a letter he addressed to
Senate President Vicente Sotto III [ CITATION Fra18 \l 1033 ] , this paper limits news
articles from that period since discussions before that date did not form part of
the final deliberations submitted to Congress. Since determination between
recommendations of the Inter-Agency Technical Working Group and the AFP will
be the basis of Congress, it is but only right that the focal point of this paper
4
Source: Ibid.
Extent of Foresight on the AFP Attrition with the Retirement Age of Sixty Years Old: Inputs
to the Transition Assistance Program (TAPS)
13

should be limited to all publications or news articles after the proposal reached
Congress.

1.5 DEFINITION OF TERMS

1.5.1 Active Cumulative Service – refers to the total active service of an


Enlisted Personnel.

1.5.2 Active Service – any period in which a military person performs


military duty or service.

1.5.3 Core Competency – a fundamental knowledge, ability or expertise


in a specific subject area or skill set.

1.5.4 Tenure-In-Grade – maximum number of years per grade an


individual can remain in a specific grade. Also see Time-in-Grade.

1.5.5 Grade – the military rank of an Enlisted Personnel from the lowest
to the highest, they are: Private; Private First Class; Corporal; Sergeant; Staff
Sergeant; Technical Sergeant; Master Sergeant; Senior Master Sergeant; and Chief
Master Sergeant or their equivalent in the Philippine Navy and Philippine Air
Force.

1.5.6 Initial Appointment Grade – the lowest rank in a major or support


service to which an Enlisted Personnel can be enlisted.

1.5.7 Major, Technical or Administrative – a branch of service of the


Armed Forces of the Philippines to which an Enlisted Personnel is enlisted.
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1.5.8 Relative Seniority – order of precedence of enlisted personnel


having the same grade.

1.5.9 Specialty – an area or field of military occupation where a military


person specializes in.

1.5.10 Table of Organization – a document which reflects, among others


the positions in the military organization which are to be occupied, their grades
and major or support service.

1.5.11 Time-in-Grade – a period of active service rendered by an Enlisted


Personnel in a certain grade or rank. See also Tenure-in-Grade.

1.5.12 Enlisted Personnel – a military personnel who holds any of the


following ranks: Private; Private First Class; Corporal; Sergeant; Staff Sergeant;
Technical Sergeant; Master Sergeant; Senior Master Sergeant; and Chief Master
Sergeant or their equivalent in the Philippine Navy and Philippine Air Force.

1.5.13 Disciplinary Attrition – a mode of attrition of any military personnel


who commits an act of misconduct, low potentiality or substandard performance.

1.5.14 Forced Attrition – a mode of attrition wherein an officer or Enlisted


Personnel who, having been considered for promotion to the next higher grade,
failed to qualify on account of his/her own fault, failure or negligence or lack of
individual merit for promotion.

1.5.15 Lateral Attrition – shall mean the separation from the military
service of commissioned officers who are found unqualified for promotion after
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attaining the prescribed active commissioned service-grade and age limit as


provided by law.

1.5.16 Natural Attrition – a mode of attrition upon reaching 30 years of


active service or 56 years of age, whichever is later or when an officer or Enlisted
Personnel incurred death or illness or injury while in the active service.

1.5.17 Transition Assistance Program (TAP) – a package of services for


separating or retiring military personnel and dependents of military personnel
who were Killed-in-Action (KIA) to facilitate their smooth transition to civilian life.
These services include any of the following: pre-separation and retirement
planning; vocational and technical skills training; job search assistance and
business livelihood or enterprise development assistance and other related
services.
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CHAPTER II
2.1 REVIEW OF RELATED LITERATURE

This paper turned to available materials sourced from the internet,


particularly from published works prepared by students from the National
Defense College of the Philippines.

The paper, “An Assessment of the Morale and Welfare Program of the
Armed Forces of the Philippines,” by Rolito B. Abad was helpful in pointing out the
issues which impact the lives of Enlisted Personnel. It detailed how pay and
allowances, retirement, and promotion are highly regarded by Enlisted Personnel
as “contributory to institutional strength and high combat readiness.” [ CITATION

Rol05 \l 1033 ]This understanding, gained from said paper, validated that there is a
correlation between areas of personnel management concerns with the morale
and performance of Enlisted Personnel. The insights on said paper could be used
in limiting the areas of personnel management which are placed high among the
concerns of Enlisted Personnel. The other variable programs which were not
given high importance would be treated as contributory factors in the result of
this paper.

Another is the paper submitted by Miguel G. Gialogo entitled, “A Survey on


the Perceptions of PAF Officers on the AFP Attrition Laws.” Gialogo identified the
importance of applying the AFP’s Attrition laws in maintaining professionalism
and high level of morale in the Philippine Air Force’s Corps of Officers. Although
Gialogo theorized that attrition laws are independent variables which could be
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considered in determining the level of morale and performance of PAF’s Corps of


Officers holding middle ranks, it inevitably solidified one of the premises of this
paper that, areas of personnel management, in this case, promotion or
separation, influences a military man’s career decisions. [ CITATION Mig02 \l 1033 ]

The study of Tito V. Lim, “The performance of the Internal Control


Processes of the Armed Forces of the Philippines Pension System,” outlined the
various laws, regulations, and issuances related to the retirement and separation
among AFP personnel. His work simply revealed all the pertinent laws,
regulations, and issuances related to retirement and separation. This helped in
finding the true sense of what these laws are trying to administer and achieve in
relation to the AFP pension system. It revealed how antiquated the pension
system is and how years of neglect gave rise to the problems it could be facing if
not properly addressed. [ CITATION Tit02 \l 1033 ]

Some of the foregoing studies mentioned notable references wherein


which this paper may have used for cross-referencing purposes. The researcher
also included cross-related materials in this paper’s references.

2.2 REVIEW OF RELATED FOREIGN STUDIES

In “Ways You Can Find Your Bliss at Work,” Kerry Hannon uses the latest
research from the fields of motivation, creativity, behavioral economics,
neuroscience, and management to reveal what really makes a successful worker.
Combining powerful stories with cutting edge findings, Hannon shows leaders at
every level how they can use scientifically-proven techniques to promote smarter
thinking, greater innovation, and stronger performance. 
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Brimming with insights and actionable recommendations, the site offers


employees and executives alike game-changing advice for working smarter and
turning any organization—regardless of its size, budgets, or ambitions—into an
extraordinary workplace.[ CITATION Han16 \l 1033 ] The online source was used to find
latest industry tools in keeping workers motivated in the workplace environment.
The researcher would like to know if foreign models can be used in the AFP with
regard to retaining personnel facing career development issues.

In another study, “Motivating Soldiers: The Example of the Israeli Defense


Forces” by Sergio Catignani, the author provided insights how the Israeli Defense
Forces was able to obtain advantage over its enemies. The study defined
motivation as that which compels a person to act with determination, or that
which gives rise to an inclination that manifests itself through a specific behavior.
In certain circumstances or under certain stimuli, the individual assumes
particular attitudes and acts on them. It asserts that motivation has two essential
components: impulse and motive. Impulse refers to the internal process that
incites a person to act. Motive is that which generates the behavior and helps the
person achieve his objective. The objective is the reward that satisfies the
individual’s internal urges. He argues that motivation necessarily includes a
conscious desire to obtain something, declaring that a great part of human
behavior is organized around being motivated and oriented toward a defined
objective. [CITATION Ser \l 1033 ]

A report furnished by the RAND Corporation for the United States


Department of Defense has sought to identify military retirement plan alternatives for active

and reserve personnel. It is written as a review of past studies on retirement, for the
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purpose of giving the Department of Defense background and insight into


previous research on military retirement, so that it might be possible to learn
from and build upon past reform proposals and apply those insights to new
alternatives. The report centered around five (5) major issues concerning
retirement system reform: 1) Cost reducing benefits associated with the
transition from active to civilian life; 2) Equity providing benefits for members
separating before 20 years; 3) Selective retention for key servicemen to stay
beyond 20 years; 4) Civilian comparability; and 5) Force management flexibility.
[ CITATION Joh06 \l 1033 ]

The researcher needed to review statistical methods, which the source was
readily available in the internet. The website provided answers to data
interpretation and helped with forming the backbone of this paper. The webpage:
“Understanding Research Results: Statistical Inference” discussed about methods
of statistics and basic about knowledge of statistics. [ CITATION Fla16 \l 1033 ]

2.3 REVIEW OF RELATED LOCAL STUDIES

Domestic sourced materials were very limited on the topic of this paper.
The researcher relied on new articles posted on major news websites for content.
Opinions of key writers on the subject matter were considered for inclusion
because of sparse sources, aside from the fact that matters related to this paper
are still hot issue as of this writing.

Notable legislators heeded the call of President Rodrigo Roa Duterte of


looking into the pension system of the AFP. In 2017, Representative Francisco
Jose F. Matugas II of the 1st District of Surigao del Norte authored House Bill №
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5673, seeking for reforms on the benefit and pension system. His bill promises
changes on the pension entitlement of a retiree which is automatically adjusted
to those in the active service, non-contributory nature of the pension, and the
early entitlement to pension benefits before the age of fifty-six. [ CITATION Fra17 \l
1033 ]

In 2013, a bill was introduced by Magdalo Partylist Representatives Gary C


Alejano and Francisco Ashley L. Acedillo. House Bill № 959 highlights the
integration of all existing laws on military personnel, the grant of separation pay
for enlisted personnel with less than 20 years of service, additional seniority and
lineal list grade in the active service, consolidated the eligibility requirements for
every rank, and tempers the lateral attrition provision under Section 10 of
Presidential Decree № 1638.[ CITATION Gar13 \l 1033 ]
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CHAPTER III
3.1 RESEARCH DESIGN

The researcher used a descriptive, evaluative, and documentary analysis for


its basis from related information, official records, pertinent laws, studies,
publications, circulars, and regulations of the AFP. Content analysis of news
articles and media websites was helpful in formulating the research
questionnaires in order to get the interpretable data from the population size.
The conduct of survey as the medium to generate data among the three (3) Major
Services of the AFP as well as the Technical or Administrative Support Services –
who are the logical target population of this paper because of the proximity cause
in the implementation of the Military and Uniformed Services Personnel
Separation, Retirement and Pension Bill. There were also scheduled interviews
and focused group discussions among leading personalities who were involved in
coming up with the recommendations to the Congressional Committee on
government enterprise and privatization as well as the Committee on national
defense and security. The application of statistical concepts and methods resulted
in the interpretation of the data, which were collected at a pre-arranged period.
Data encoding and plotting revealed frequencies or tendencies which were duly
noted and charted.

3.2 DATA GATHERING PROCEDURES

As was stated above, information necessary for the formulation of the


working topic of this paper were taken from news sources and articles coming
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from media. Government news outfits were also referenced in the final draft of
the questionnaire to be given to the respondents. Using the structured survey
format, questions were formulated based on the possible outcome scenarios
related or co-related to the working topic. The possibility of a null hypothesis was
eliminated in this paper because of the positive formulation and factored-variable
outcome. Pre-testing were conducted with the draft questionnaires to ensure
that all possible scenarios are covered and considered before copies of the same
are reproduced and delivered to the various AFP offices and units. The
respondents comprise the homogenous demographics of senior Enlisted
Personnel in the AFP whose cumulative military service reached twenty (20) years
or around the compulsory age of retirement. This now forms the strata of Enlisted
Personnel who will be undergoing stratified sampling. From a list coming from the
Office of the Adjutant General of the AFP, respondents were picked by the
researcher through a list with random numbers. Those who were picked to
undergo one-on-one interviews for the purpose of getting their opinions on
certain questions were summarized and duly noted.

After the distribution of the questionnaires, the researcher caused the


collection of the questionnaires periodically. There were challenges in the
recovery of the questionnaires because of conflict of work schedules both of the
collector and the respondents. Oftentimes, the researcher would be asked to
follow-up by mobile phone. The size and proximity to the location where the
survey questionnaires were to be delivered caused considerable delay in the
encoding and interpretation of the data. Acquaintances and friends were
recruited to help in the distribution and recovery of the survey materials.
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3.3 RESEARCH SETTING

The setting of this paper covered a sample size enough for management
and collection. The simple method of obtaining the desired sample is to get ten
percent (10%) of each of the total population of the junior and senior Enlisted
Personnel inside Camp General Emilio Aguinaldo. However the Slovin’s Formula
was used to acquire the desired number of respondents based on the following
formula:

2
p
tq
Initial Sample =
d2
q=

and

Initial Sample
Total Sample
Initial =Sample - 1
1Population
+
The sample size needed to ensure adequate sampling of the respondents
was (number of respondents) or (% of the population). The researcher provided
a considerable figure for allowance in case of loss and non-recovery of
questionnaires. The number of questionnaires distributed per stratum is (indicate
number) or (indicate % number). However, those actually returned or recovered
by the researcher reached to (indicate number of returned questionnaire).
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Survey respondents were limited to the senior Enlisted Personnel who are
nearing the retiring age of fifty-six or who has accumulated twenty years of
military service. Pre-test, distribution, and retrieval of questionnaires were done
from (mention the dates).

3.4 INSTRUMENTS

One of the instruments used in this paper is the Structured Survey


Questionnaire, which was taken from content sourced from online material
related to the working concept of this paper.

The survey respondents were from the two (2) strata: junior Enlisted
Personnel and the senior Enlisted Personnel. Several of the materials were based
on the probable end-result of proposed bill in Congress. These were the thematic
questions included in the questionnaires. Thus, from the perspective of the junior
Enlisted Personnel, to what extent are the differences with regard to their
foresight in relation to those actually “at risk” with the application of the AFP
Attrition laws and those who are not affected by its application. Another is the
perspective from the senior Enlisted Personnel, to what extent are the
differences with regard to their foresight in relation to those actually “at risk”
with the application of the AFP Attrition laws and those who are not affected by
its application.

Before the mass reproduction of the questionnaires, there was pre-testing


made. The conduct of the pre-testing allowed for the elimination of trivial or
irrelevant questions that could muddle the result and make it inconclusive to
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support a conclusion. The draft was presented to the Thesis Adviser before final
printing.

Another is the Interview Guide, which was personally developed by the


researcher through focused group discussions among senior Enlisted Personnel
whose are experts in their chosen field of endeavor, were pre-selected by the
researcher. Their insights were used as the main instrument in assembling the
draft interview questions. Exhaustive efforts were also exerted in the gathering of
documents, directives, and policies so as to support the assembling of data. In
addition, analysis to every vital information being gathered was given reasonable
consideration.

3.5 METHOD AND PROCEDURE

The collection of the questionnaires commenced the tedious process of


interpretation of the data. Its treatment follows a careful method of evaluation
and interpretation. The quantitative data were meticulously loaded in pre-
programmed spreadsheet table which have been formatted to automatically
compute the necessary results based on the loaded data. The characteristics of
the respondents were indicated as to the frequencies. The percentage analysis
was used in this paper, the formula of which follows:

Frequency of Distribution
Percentage = X 100
Number of Respondents

The measures of central tendency and measures of variability are used. The
measure of central tendency is called weighted mean, the formula of which is as
follows:
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Weighted Mean = №of Respondents ∑ f Xm


Another is by the use of Ranking. Ranking is the method of determining the
priority based on the position of importance of the item in the survey over other
items. In this paper, ranking was used to denominate the item with the lowest
weighted average as first in the ranks.

On the other hand, descriptive statistics and measures of dispersion such as


frequencies, means, and cross tabulations were sparingly used in this paper for
the analytical summary or conclusion while qualitative responses in the interviews
were manually tabulated and categorized for comparative analysis.

3.6 TREATMENT OF DATA

After the data were gathered and collected, they were evaluated by the
researcher for clarity and conclusiveness. Using statistical inference and methods,
the information on the respondents’ demographic profile were computed for
frequency and percentage results. Although this was simply done by loading the
numbers in the pre-formatted spreadsheet containing the formulas, the process
of vetting all loaded information from each and every questionnaire cannot be
overlooked. The weighted mean was computed. Likewise the standard deviations
for every group of respondents were also computed. Another analysis is the scale
range wherein the responses fall within Strongly Agree, Agree, Disagree, and
Strongly Disagree. The mean value and the standard deviation acquired from the
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data will be used for the t-Test. The t-Test was also used to answer the
hypothetical of this paper. The formula for the t-Test is as follows:

t= X1 X2
√ 1 2+ s2 2

1
n1 1 s n2 1 1
+
n1 n2
n n 2
1+ 2

Where:

X1 =mean of the first sample


X2 =mean of the second sample
S1 =standard deviation of the first
S2 sample
=standard deviation of the second sample

N1 =number of items in the first sample


N2 =number of items in the second sample
Graphs and tables were illustrated for purposes of summarizing and
correlating raw information, and simplifying them for further analysis. The
respondent’s responses were tabulated using a modified Likert’s four-point scale.
The options being used for the items therein were as follows: Strongly Agree;
Agree; Disagree; and, Strongly Disagree. For Quantitative analysis of the options,
the following points were assigned: Strongly Agree (4 points); Agree (3 points);
Disagree (2 points); and, Strongly Disagree (1point). For verbal interpretation of
options, full intervals were closely observed as herein indicated: Strongly Agree
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(3.51 & above); Agree (2.51 –3.50); Disagree (0.51– 2.50); and, Strongly Disagree
(0.50 & below).
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