The Armed Forces of the Philippines in their pass-in-review during the AFP 81st Anniversary in Camp Aguinaldo in December 2016. (INQUIRER FILE PHOTO)
MANILA— Albay Rep. Joey Salceda has found a “win-win” solution for military and uniformed personnel (MUP) worried over the government’s proposed pension reforms: imposing mandatory pension contributions but allowing them to keep their present retirement benefits.
However, the House of Representatives will push for a 5 percent cap on the yearly salary increases of MUPs to bring down the unfunded pension liabilities from P9.7 trillion to P3.6 trillion.
Salceda, chair of the House ways and means panel, acted upon President Ferdinand Marcos Jr.’s instruction to find a solution to the MUP pension woes.
In an interview on Monday, Salceda said his proposal would be a “win-win” solution for the active and retired MUPs and the government.
“If you run the actuarial model again, we can bring down [the pension liabilities] to P3.6 trillion—which to me is a reasonable risk for the government, that we can sustain,” he said.
Under Salceda’s proposal, the salaries of MUPs will increase by only 5 percent yearly for 10 years.
The MUP pension reform bill will push for a mandatory contribution of 9 percent of the MUPs’ salaries, which will go to their pension fund, while the government contributes 12 percent.
“There is a mandatory contribution only to improve their benefits,” he said.
Salceda said MUPs would retain the present retirement benefits provided under the country’s laws: that retirees’ pensions will be automatically indexed to the basic salary of active personnel; that MUPs will retire one rank higher; and that MUPs will retire at the age of 56.
Warning of fiscal crisis
“Only the mandatory contribution will be retained, yes. There should be a parity that you should have a stake in the system, in your benefits,” he said.
In March, Department of Finance (DOF) Secretary Benjamin Diokno warned of a fiscal crisis as he pegged the MUPs’ unfunded pension liabilities to be at P9.7 trillion.
Diokno pushed for mandatory pension contributions and stripping MUPs of the current retirement benefits like automatic indexation, allowing them to retire one rank higher, and setting the retirement and pensionable age at 57.
The proposed MUP pension reform is among the priority measures of Marcos.
A number of MUPs who declined to be named said they were thinking of retiring earlier because they did not want to be affected by the DOF’s proposal.
Salceda chided them for not asking lawmakers or expressing their apprehensions to their legislative representatives.
“They should have complained to us; they should not be complaining elsewhere … And this solution has been agreed on in the last Congress by all the services and their secretaries,” he said.