Palace starts studying options to reform MUP pension system
BATTLE READY | Military and police personnel stand in formation in this file photo. Their pension system is now under review. (INQUIRER FILE PHOTO)
MANILA, Philippines — The Marcos administration’s economic team is looking at various options to reform the pension system of military and uniformed personnel (MUP), some of which are being suggested by MUPs themselves.
The possible options will be included in a bill they intend to file when Congress starts its next session in July.
One such potential amendment is the front-loading of pensions in lieu of indexing the monthly benefits to current pay levels.
Finance Undersecretary Maria Lualhati Dorotan-Tiuseco told the Inquirer that many suggestions have come up as the consultation roadshow gathered steam.
Last June 2, the technical working group (TWG) tasked to create a new legislation acceptable to all stakeholders met with about 250 on-site and remote participants from the Armed Forces of the Philippines (AFP) Health Service Command.
During the meeting, Tiuseco brought up the proposed options for MUPs who would opt for early retirement.
One option for the early retirees is to receive all pension benefits in one lump sum upon leaving their posts.
Another option is for the early retiree to receive in advance 60 months’ worth of pension, after which they would receive their benefit monthly.
‘Very fluid concepts’
A third option was for the early retiree to receive pension benefits at age 57.
“These concepts are very fluid at the moment,” Tiuseco said. “We are crunching numbers to figure out the suitable [permutations of these proposed options].”
She said these options were proposed in consideration of varying financial situations among MUPs and may be applied on a case-by-case basis.
Based on the current MUP pension system, an MUP is automatically promoted one rank higher upon retirement and their monthly pension is automatically indexed to the salary of personnel in active service.
MUP pensioners can receive their pension after being in service for 20 years with no minimum pensionable age.
Further, MUPs do not contribute to their pension system, and pension benefits are sourced yearly from the national budget.
Adjustments made
Tiuseco said the TWG has made adjustments to improve the current proposals for the MUP pension reform after its initial consultations with the AFP and separately with members of the Philippine Air Force and the Presidential Security Group.
After four meetings with military groups, the TWG is scheduled to meet with uniformed personnel, starting with the Philippine National Police on June 7.
Tiuseco said the economic team would continue to gather the sentiments of the MUPs and introduce necessary improvements to the proposal in order to create a well-balanced solution.
Finance Secretary Benjamin Diokno earlier warned of an imminent fiscal collapse due to the ballooning pension payments of MUP, with total yearly payouts to MUP expected to breach the P1 trillion mark by 2035 from P213 billion this year.
