Marcos ‘concerned’ with pension reform's impact on MUP morale — Galvez | Inquirer News

Marcos ‘concerned’ with pension reform’s impact on MUP morale — Galvez

By: - Reporter / @BPinlacINQ
/ 12:40 PM May 15, 2023

MANILA, Philippines — President Ferdinand Marcos Jr. is “very much concerned” about the impact of the proposed pension scheme reforms on the morale and welfare of the military and uniformed personnel (MUP) in the country, said National Defense Senior Undersecretary Carlito Galvez Jr.

The much-dreaded proposed retirement reform for MUP, applicable to current and future staff, will include mandatory contributions and pensions for personnel of a single rank and will no longer be tied to salary increases.


Speaking before the Senate committees on national defense and security, government corporations and public enterprises, ways and means, and finance on Monday, Galvez said the Department of National Defense (DND) and the Armed Forces of the Philippines want the morale and welfare of MUP to “be given due weight” in consideration of proposals to overhaul the system for their pension.

He noted that the proposals to reform the pension scheme have already triggered “some sort of apprehension” among MUP.


“In fact, the President gave instructions [since] he is very much concerned about the impact of this [pension reform] on the morale and welfare of our armed personnel and policemen. He wanted that there should be continuous discussion to have common ground,” Galvez said.

The DND officer-in-charge pointed out that discussions on proposals to change the system for MUP retirement benefits have “already affected the morale and caused uneasiness, not only from the active branch of the armed forces but even from our veterans and retirees.”

According to Galvez, around 70 to 80 percent of enlisted MUP are expected to seek optional retirement not to be affected by the possibility of a new pension law.

“We should really look at the middle ground so that we can really see the morale and welfare of our people will be taken care of. During our discussion, there is no problem if the system will be given to the new entrants. They all unanimously agree,” he said.

But, Galvez noted, there are “some adverse reactions” to the other key changes being proposed in the MUP pension system.

“If this system is still financially impossible, we are very amenable to modifications in the system so long as it is fair and equitable to the MUP. And also, if it is based on financial soundness or scientific actuarial science,” he said.

The Philippine Coast Guard, the Bureau of Jail Management and Penology, the Bureau of Fire Protection, and the Philippine National Police were among MUP members who said they were amenable to the proposed MUP pension system reforms, albeit with reservations and other specific recommendations.

“We fully support that this law shall be applicable only to new entrants and the pension rates should be reckoned one rank higher on the last previous rank that they occupied,” Vice Admiral Robert Patrimonio said.

Galvez, meanwhile, broached the idea of creating an information body “that would go around to different units nationwide.”

“Because the sentiment of the soldiers is that they should be consulted first before we can put some recommendations on the law,” he argued, saying this is aligned with the President’s position to consult all stakeholders about the proposal first.

The proposal to create a unified separation, retirement, and pension system for MUP is among the priority measures endorsed by the Legislative-Executive Development Advisory Council under the Marcos administration.

Spending more on pensions than improving MUP services

Earlier in the hearing, National Treasurer Rosalia de Leon said the current MUP pension scheme, which is non-contributory and fully funded by the national government, makes it “highly susceptible to shocks and is fiscally unsustainable.”

“The threat that the government will be unable to meet its pension commitments or improve the country’s defense posture is real. We are already spending more on pension liabilities than on keeping our military and uniformed services safe, competent, and in fighting shape,” she said.

De Leon said pension benefits and adjustments are “granted as a gift under full discretion of the national government, without vested ownership of military and uniformed personnel.”

“Pension benefits and increases are unpredictable. Dependence on full government funding makes the pension system susceptible to economic and fiscal downturns, which creates an unstable and unreliable benefit system for MUP and their dependents,” she explained.

She further noted that it is also unsecured, saying the current design features seriously threaten the system’s sustainability and place future MUP generations and their families at risk.

With this in mind, the finance department is pushing for the following key reforms in the MUP pension system:

  • The reform will apply to all active personnel and new entrants
  • Adjustment of pension benefits by up to 1.5 percent within a given year, subject to the evaluation of economic conditions and actuarial life of the pension fund
  • MUPs to start receiving their monthly pension at 57 years old
  • Mandatory contributions for active personnel and new entrants that will ultimately inure to their benefit

“We ask that we work together to guarantee the quicker modernization of our civil and national defense and the continuous, reliable provision of fair retirement benefits for the nation’s primary defenders while ensuring the government’s fiscal stability,” de Leon said.

Finance Secretary Benjamin Diokno had earlier sounded the alarm over the looming “fiscal collapse” stemming from the ballooning pension payments, with total payouts to MUP expected to exceed the P1-trillion mark by 2035 from P231 billion in 2023.

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TAGS: Galvez, Marcos, MUP, pension

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