President Ferdinand Marcos Jr. (Photo by RAY ZAMBRANO)
MANILA, Philippines — President Ferdinand Marcos Jr. is pushing for the review of the pension scheme for the military and uniformed personnel (MUP) to avoid a “fiscal collapse” and allow the government to save P130 billion a year, Finance Secretary Benjamin Diokno said on Tuesday.
At a Palace briefing, Diokno said the government has allotted P120 to 130 billion for the pension of uniformed personnel for this year alone.
“The current pension system is fully funded by the national government. It is appropriated annually in the budget but there’s no contribution from the retirees. That’s a unique kind of pension system.” Diokno told reporters.
He pointed out that the average monthly pension of military personnel is P40,000 a month, while Social Security System and Government Service Insurance System (GSIS) retirees get P4,528 and P13,600.
Under the current pension scheme, the pension of retired personnel will increase by 100 percent when the “salary of the incumbent [official] is doubled.”
Under the same scheme, uniformed personnel with at least 20 years of active service could avail of an optional retirement.
This means that those recruited at the age of 20 would be eligible to retire at the age of 40.
“Military people, they live longer than us, okay, some at the age of 90, okay. So, they retire at 40 to get their pension up to age 90. Isn’t that ridiculous?” Diokno asked.
“And right now, the situation is so bleak, for example, that if you compare the current operating expenditures or maintenance and operating expenditures of the whole Armed Forces of the Philippines and the capital outlays so the money they buy for airplanes, etc., it is actually a much less than the amount of pension that we are allocating for the retirees,” he said.
‘It’s not sustainable’
The finance chief warned that there would come a time when the current budget would be “only about a third, one-third or one-fourth of the money that we’re paying for the pensioners.”
“So we have to really address that issue. It’s not sustainable. I said if this goes on, there will be a fiscal collapse,” he said.He said the President was “recognizing the need” for the proposed MUP pension reform and would push for its passage in Congress.
Benjamin Diokno —PHOTO FROM DOF FACEBOOK PAGE
He recalled telling the President: “Your predecessors have decided to kick the can down the road; they don’t want to address this.”
“I usually call this the ‘elephant in the room’—nobody would like to touch it and they simply ignore it,” he said.
According to Diokno, Department of National Defense officer in charge Carlito Galvez and Interior Secretary Benhur Abalos have agreed on the following proposals for the MUP pension — for the reform to apply to all active personnel and new entrants, removal of automatic indexation of pension to the salary of active personnel of single ranks, the military and uniformed personnel will receive their pension starting at 56 years old, or now it’s now adjusted to 57 years old, and mandatory contributions will be required for active personnel and new entrants similar to the GSIS pensioners.