Reasons PNP Retirees Face Financial Difficulties

There isn’t a single task a man undertakes that can be described as simple and free of difficulties. Undeniably, a police officer’s job is not one that anyone can launch at any time because it involves putting more than just physical prowess and firearms on the line.

PNP personnel risks their lives for the commitment to serving our country. Even their family safety is affected as well.

When they cannot perform their duties, their pension benefits are the saving armor of their retirement. But how come PNP retirees still struggle financially after leaving the PNP service despite the honor and commitment they have shown to the nation?

Though the Financial Institutions, under the umbrella of the National Government, have provided good benefits and life security plans to PNP personnel, several retirees still face financial difficulties after they retire from the service.

Why did this happen?

This post explains why PNP retirees have trouble with money after they leave the service and points out important factors in their retirement benefits.

Insufficient Funds

According to a report, the government raised the pay of active police and military personnel in 2018 while delaying the pay increase for retirees for a few years. As a result, the government is currently paying in installments on this, and the process is prolonged. It will take another five years to pay the remaining 26 months fully. With this, many retirees have already died not receiving their full retirement benefits.

Not Every Retiree Received Compensation

Before the Arroyo administration, the Department of Budget and Management always made the Funds available to compensate retirees fully.

However, before the release of this fund, rumors circulated that it would only include PNP retirees who had paid their annual dues.

These are all rumors without evidence, but the PNP leaders have not provided an explanation to prevent speculation and other conspiracy theories from expanding.

Rely on one source of income

Most police officers rely on one source of income, and that is the salary from their job.

We know that our organization focuses on public service, but it doesn’t prohibit us from pursuing business or earning passive income as long as there’s no conflict of interest involved. Some personnel retired from the service without having a side hustle or what we call a “sideline” business.

There are two types of income: active income and passive income.

Active income is essentially when you get paid for your time—meaning you’re exchanging your time or service for money. For example, your employment as a police officer where you spend hours at your job. It’s active because in order to get paid or receive your salary, it requires your work, your time, and energy.

The other type of income that is superior to active income that every PNP personnel should be aware of and strive for because it allows you to make more money is passive income.

Passive income is the income you receive that does not involve any further work on your part. Others would call it “earning money while you sleep.”

Examples of passive income are house or car rental income, investment dividends, earning interest from the bank, and other things that require little to no effort.

It’s no surprise that most uniformed personnel put their extra money in Armed Forces and Police Savings and Loans Association, Inc. (AFPSLAI) because of its highest dividend rate of 16% per year or 4% per quarter.

Follow Robert Kiyosaki’s principle — never put your money in a bank. A great example of this is putting your hard-earned money to AFPSLAI. AFPSLAI is not a bank but rather a private non-bank financial institution regulated by the Bangko Sentral ng Pilipinas (BSP).

If you are not comfortable with AFPSLAI, other option would be digital bank that offers highest interest rate like Maya (formerly PayMaya) with 6% interest rate per annum and Seabank with 6% interest rate per annum.

Seabank pays interest on a daily basis, while Maya pays interest on a monthly basis. These digital banks do not implement a lock-in period, meaning you can withdraw your money anytime.

In active income, you work for money, while in passive income, money works for you.

PNP Retirement Benefits

The PNP retirement benefits may affect after 20 years of service; the total monthly pension is 50% of the retired grade’s basic salary and longevity pay. Its percentage goes up 2.5% each year after 20, reaching a maximum of 90% for 36 years of service.

However, there’s an exception for uniformed personnel who can choose to get retirement pay all at once and in advance for the first five years. It will pay it in full within six months of retirement or completion.

READ: PNP Retirement and Separation Benefits

In addition, it will add the PNP officers’ and non-officers pension benefits based on the active duty wage scale. The officer is entitled to a year’s salary, a pension equal to 80% of his last wage for life, and other benefits as provided by law.

If a member who retired under this section dies within five years of retirement, his surviving lawful spouse or, if no such spouse exists, his surviving dependent legitimate children are qualified for the pension for the rest of the five-year insured period.

Here are the detailed explanations of who are the legal surviving heirs of the deceased retiree:

Surviving Spouse

A legal partner or spouse may claim survivor benefits for a derivative pension or pension transfer; if they were lawfully married to the departed PNP pensioner just before the former’s retirement or separation and have not neglected the recently dead PNP pensioner without justification.

Other Survivors

The surviving lawful, legitimated, and legally adopted children, including any illegitimate children who are single, either under the age of majority or over the age of minority, but unable to support themselves due to a physical or mental disorder (developed before reaching adulthood), and who are not married.

Additionally, if the surviving spouse or children are not alive, the surviving family or parents are entitled to the claims. The surviving single siblings are allowed to claim in the absence of the first family.

Wrapping Up

Those noted above are the primary reasons PNP retirees face financial difficulties despite having adequate life insurance and substantial benefits offered during their service.

PNP retirees provide their all to the service throughout their lives; how come retirees are only partially compensated for their pension benefits?

Besides the speculations and controversies surrounding the National’s failure to release PNP retirement benefits in 2018, many surviving families still experience the same scenario today.

Moreover, many retirees die without enjoying the fruits of their sacrifices because of failure and slow disbursement of the funds from the National budget before.

For PNP personnel who are about to retire or have opted to retire early, the remedy (for delayed claims) is to get ready ahead of time by updating their service records or PAIS records, breaking down their leave credits, getting clearances, etc., so that their retirement claims can be approved and then budgeted for DBM.

FAQs:

What is the person’s responsibility who unjustifiably delays pension payments?

The office may take administrative disciplinary actions against an incompetent officer or staff member who fails or neglects to discharge a retiring government worker’s pension, payments, or other pension benefits within the time frames specified. Following a hearing and fair trial, the offending officer or police officer will be paid leave for six months to a year at the discretion of the disciplinary authority.

This penalty does not apply if unforeseen circumstances or other unusual events prevent the release of retirement benefits. In these cases, the thirty-day period begins when the cause dies.

What is the person’s responsibility who unjustifiably delays pension payments?

He is entitled to one year’s salary, an entire life pension equal to 80% of his last salary, and other compensation, in addition to other benefits specified by law.

If a member who has been retired under this section passes away within five years of retirement, his surviving legitimate husband or wife, or in the absence of one, his surviving dependent children, are entitled to the pension for the balance of the five-year assured period.

Are PNP employees who retire with exceptional cases eligible for a pension?

An active civil or criminal case against a retired person does not preclude compensation for PNP retirement benefits.

If the authority does not suspend or resolve the case within three months of the retiree’s retirement date, retirement benefits are released immediately, regardless of the case’s final resolution. If a retiree’s case is being appealed, it is legal to exempt PNP retirement benefits.