Government savings eyed to help fund MUP pension
AKO Bicol Rep. Elizaldy Co (Photo from his office)
MANILA, Philippines — Lawmakers are looking to fund the P120-billion annual requirement for the pension of retired military and uniformed personnel (MUP) by dipping into government savings.
The chair of the House appropriations committee, AKO Bicol Rep. Elizaldy Co, on Wednesday said he and other lawmakers had begun exploring fund sources for the MUP pension ahead of deliberations on the proposed 2024 national budget.
Co said Speaker Martin Romualdez had instructed him and his colleagues “to ensure that the problem of the MUP pension is resolved within the year” and find ways to raise the hefty P120-billion yearly requirement.
A check of the 2017 to 2023 national budgets showed that the allocations for MUP pensions ranged from P81.7 billion in 2018 to a high of P163.99 billion in 2022. For 2023, P139.51 billion was allocated for the pension of retired MUPs.
In comparison, the allocation for the pension of civilian government employees ranged from P1.15 billion in 2017, to a high of P1.6 billion in 2022.
“It is important for myself, the President and the House Speaker that we take care of the well-being of our MUPs… Rest assured before the end of 2023, we will find a win-win solution for everyone,” Co said.
“We will not dilly-dally on this. We will solve it this year,” Co added.
Diokno warning
Finance Secretary Benjamin Diokno led moves to overhaul the MUP pension system in May, as he warned of a fiscal collapse due to the ballooning funding requirement.
President Ferdinand Marcos Jr. agreed and said the MUP pension fund would be depleted in five to six years unless the government finds ways to make the pension system “self-sustaining.”
The proposed MUP pension reform was mentioned again among the priority measures in Marcos’ second State of the Nation Address (Sona) on Monday.
The current MUP pension system covers retirees from the Armed Forces of the Philippines, the Bureau of Jail Management and Penology, the Bureau of Fire Protection Philippine National Police, the Philippine Public Safety College, the Philippine Coast Guard, and the Bureau of Corrections.
It is currently fully funded by the government and automatically indexed to the salary of active personnel of the same rank.
This means that the pension amount rises based on the current salary of the personnel of similar rank in active service. Therefore, when the salary of the armed services doubled in 2018, this also reflected in the pension of retired personnel.
Nine times higher
Pensions can also be received after 20 years of service without a minimum pensionable age requirement, such that those who went in at 20 can retire at just 40 years old and receive a monthly pension thereafter.
According to Diokno, the average monthly pension of MUPs is almost nine times higher compared to that received by Social Security System retirees and three times higher than GSIS retirees’ take.
This imbalance is also expected to be inputted in the proposed MUP pension reform law that Diokno hoped would be passed this year, along with proposals for the MUPs to contribute to the retirement fund so that the government will not solely carry the burden and thus free up funds for other needs.
5 to 9 percent contribution
Diokno also reiterated that they are looking at a gradual imposition of the contribution rate, starting from 5 percent, then 7 percent, and then 9 percent over a period of nine years.
“We are pushing for this. The military pension reform is part of the top priority legislative agenda of the President, concurred in by Congress and we expect this to be passed before the end of the year, and so it will have an impact as soon as January of next year,” Diokno said during the post-Sona economic briefing at the Philippine International Convention Center in Pasay City.
In June 2023, a technical working group led by the Department of Finance began national consultations with all stakeholders to help create a pension reform law.
It has been a challenge, however, to get the MUP to get on board these proposed reforms, with Undersecretary Carlito Galvez Jr., then the officer in charge of the Department of National Defense, warning in May that up to 80 percent of military servicemen were already considering retirement just to lock in their benefits before the government revises the pension system.
