Senators eye higher retirement age in military, uniformed service to keep pension costs manageable

MANILA, Philippines—To manage escalating pension costs seen to be unsustainable in the long run, some senators are looking at raising the mandatory retirement age of military and uniformed personnel (MUP) from 56 to 60-years-old.

“Certainly, it is high time we created a standalone special fund so that we may deter the inevitable fiscal disaster of draining the public coffers attributed to the bloating pension requirements of our uniformed retirees, which up to this very moment completely rely on the national budget,” Sen. Panfilo Lacson said at an online hearing on Monday (Oct. 5).

He said that in the 2019 national budget of P3.757 trillion, P107.2B went to MUP pensions. For 2020, the adjusted appropriated amount is P80 billion. In the proposed 2021 national budget, P135.8 billion had been allocated for the pension costs of MUP.

The MUP consists of members of the Armed Forces of the Philippines, Philippine National Police, Philippine Coast Guard, Bureau of Fire Protection, Bureau of Jail Management and Penology, and National Mapping and Resource Information Authority.

“How much can be generated to establish the pension fund which as estimated by our economic managers, would run up to almost P6 trillion?” Lacson said.

Senate President Pro tempore Ralph Recto said raising the retirement age could reduce government spending on pensions.

“At 55, assuming on the average we live to 75, that’s 20 years that the government will pay,” Recto said partly in Filipino. “At 60, you pay only 15 years if on average the life span is 75,” he said.

Lacson said the compulsory retirement age will be “an important factor in the continuity and viability of the fund.”

In the military, a huge chunk of the budget goes to funding the pensions of retired personnel and veterans. Lawmakers have warned in the past that a lot of programs could be sacrificed just to pay for rising pension costs.

Other options for a self-sustaining fund discussed by lawmakers were getting funds from the sale or lease of government assets.

A mandatory contribution from active servicemen was also being considered.

TSB