Retirees await billions in unpaid pensions (Part 2)

(CNN Philippines) — Military personnel and the police, tasked with protecting citizens from lawlessness, are sometimes called to the front lines of battlefields, for example during the siege of Zamboanga City in 2013.

But despite the risks they face, many like SPO1 Ahmad Sali, are not properly rewarded.

He retired from the police service in 2006.

He got a salary loan worth almost P197,000 some 15 years ago.

Despite deductions in his salary, his loan balance has ballooned to P11.45 million.

He also owes P3.31 million from another lending company, and about P599,470 from yet another lending firm.

Sali's loans now total P 15.36 million — mainly because of nonpayment and interest charges.

His monthly pension is only P19,000.

Sali's case is not an isolated one.

Renato Buentipo served in the Army for 20 years. He died of cancer in 2007.

His widow, Lina, receives a monthly pension.

She claims the lending system is pushing pensioners like her deeper into debt.

She got a loan of P56,000, for which she is being charged P80,000 — because of interest

Lenders say borrowers are fully informed

In a statement sent to CNN Philippines, the Association of Credit Providers for PNP Pensioners say they fully assist pensioners and provide all documents for transparency:

"As mentioned earlier, when a loan is granted, the borrower is given full information about the loan and its terms —  there is a strong emphasis in ensuring that borrowers understand the loan they are taking. During the life of the loan, the borrower may request for additional information from a lender and lenders will provide copies of the borrower's ledger which sets out all the payments made and the fees that apply.

"Lenders take borrower education seriously. The loan documents will include detailed written disclosures setting out the interest rate, fees and associated charges. The loan application process also starts with alender's personnel explaining the offered interest rate, monthly payments, the amount of the loan that will be released to the borrower and other details of the loan. This information is explained in Tagalog or, as necessary, in the local dialect."

Aside from written disclosures on the interest rates, fees, and other charges, lenders also explain these terms to the borrowers, so they can ask questions.

Related: Billions in unpaid pensions

In debt before getting pension

But at least two police retirees interviewed by CNN Philippines say loan documents are not easy to obtain.

This leaves them in the dark, not knowing the status of their loans. 

Out of the more than 120,000 retirees of the Armed Forces of the Philippines, about 78,000, or 64%, have their pensions remitted directly to financial institutions.

CNN Philippines got a copy of a list supposedly listing retirees and pensioners of the Philippine National Police (PNP).

One pensioner, retired Maj. Alfonso Besario, says lending companies have access to the list.

Besario is the national president and chairman of the Conference-Assembly for Unity and Solidarity of Associations in the Armed Forces and Police Retirees, Veterans Pensioners Inc. (CAUSA-AFPRVPI)

"Hindi ko pa natanggap ang old age pension ko, may pumupunta na dito mga feelers: Sir, mag-loan kayo sa amin, ganito, ganito. Ang ibabayad niyo, ang inyong old age pension," he said.

[Translation: "I have not even received my old age pension and yet someone comes to me with feelers: Sir, apply for a loan from us, and this and that. You can pay with your old age pension."]

"Nakakatawa. Hindi mo pa nga natanggap yung pension mo, may utang ka na," he added.

[Translation: "It's funny. You haven't even received your pension and you're already in debt."]

Accredited lenders

To date, the AFP has accredited more than 30 financial institutions, mostly headed by retired military officers.

The AFP allows authorized lenders to directly collect monthly payments from the pensioners' funds.

This way, the AFP says, it can monitor the lending companies and protect pensioners from unfair interest rates and penalty fees.

Col. Rizaldo B. Limoso, chief of the AFP Finance Centers, explains the system: "Ang ginagawa namin, pag nag-billing sila at hindi makumpleto yung documentation required, hindi namin pinapasok... binabalik namin sa kanila. They have to comply [with] and satisfy the requirements na kailangan namin sa kanila."

[Translation: "What we do when they send a billing is we send back the bill if they cannot complete the required documentation. They have to comply with and satisfy the requirements that we need from them."]

But the AFP says not one of the lending companies has ever been sanctioned or blacklisted.

The military has yet to respond to an audit report in 2013, stating that there are no existing formal deals between the AFP and financial institutions.