House passes MUP bill on final reading

MANILA, Philippines — The House of Representatives has passed on final reading a bill containing the pension reforms for military and uniformed personnel (MUPs), and proposing to retain benefits for active MUPs while prescribing a new scheme for new entrants.

In its plenary session that stretched until past midnight on Tuesday, 272 representatives voted to approve on third reading House Bill No. 8969, or the MUP pension reform bill.

Four lawmakers voted against the bill: the three-member Makabayan bloc and Albay Rep. Edcel Lagman. One abstained.

HB 8969 is a priority bill of President Ferdinand Marcos Jr..

Last March, Finance Secretary Benjamin Diokno actively pushed for drastic reforms to the MUP pension system, warning that government funding for MUP retirees’ pensions and benefits was unsustainable and would eventually lead to a fiscal crisis.

At present, MUPs do not contribute a single centavo to their pensions unlike government and private sector employees, whose contributions are remitted to the Government Service Insurance System (GSIS) and Social Security System, respectively.

MUP pensions — which have an allocation of P139.514 billion under the 2023 national budget — are paid using public funds.

‘Win-win’ solution

The House ways and means committee chair, Rep. Joey Salceda, spearheaded HB 8969 upon the instruction of the president, who told Salceda to find a “win-win” solution to the MUP pension woes and the concerns of active and retired MUPs over losing their benefits.

Earlier this month, Salceda said the proposed pension reforms will slash unfunded liabilities of the MUP pension system from P14 trillion to just P3.4 trillion.

Speaker Martin Romualdez called it a “landmark legislation” that demonstrates Congress’ “unwavering commitment to the men and women in uniform who risk their lives daily to maintain peace and order.“It is a testament to our commitment to national security and fiscal responsibility,” he said in a statement.

HB 8969 proposed to cover all government employees who are primarily involved in national defense, law enforcement and peace, and order and security.

These are personnel of the Armed Forces of the Philippines, Philippine National Police, Philippine Coast Guard, Bureau of Fire Protection, Bureau of Jail Management and Penology, Bureau of Corrections, and commissioned officers of the hydrography branch of the National Mapping and Resource Information Authority.

Separate trust funds

The bill sets the retirement age of MUPs at 57 years old and proposes to create two separate trust funds for the military and the uniformed personnel. Both trust funds will be managed by the GSIS.

The monthly retirement pay was set at 50 percent of the base pay and longevity pay of the last rank held by the MUP, which will increase by a maximum of 90 percent for those with 36 years of service or more.

The retired MUP may opt to receive in advance their retirement benefits good for 36 months in one lump sum and then get their monthly pension after three years, or receive their monthly pension upon retirement.

New entrants will contribute 9 percent of their monthly salary to the pension funds, while the national government will contribute 12 percent.