Military pension scheme stays but House ad hoc panel puts cap on salary hike

Albay 2nd District Rep. Joey Salceda. INQUIRER FILE PHOTO

MANILA, Philippines — The House ad hoc committee on the military and uniformed personnel (MUP) pension system has decided to retain the current pension scheme but set a cap on salary increases.

Albay 2nd District Rep. Joey Salceda, who chairs the ad hoc panel, said that the pension system will be retained with the condition that salary increases of MUP personnel will be capped at an annual increase of 5 percent for 10years.

The pension system was retained following requests from the military and uniformed services to consider the unique risks in their profession.

“Our resolution is to simplify the reform. The heart of the problem is indexation to very rapidly growing salaries. So, the solution is to contain the most crucial aspect of the problem. Let’s contain an uncontrollable salary increase,” Salceda said in a statement.

Salceda said that despite the salary cap, the “MUPs still win.”

“The average nominal wage increase over the last five years is 4.2 percent. Over the last 10 years, the growth has been 4.4 percent. So, if that cap is imposed, the MUP is still in a privileged place compared to others,” Salceda said.

“And because President [Rodrigo] Duterte raised their salaries almost by double, they are starting from a high base. So, 5 percent for them is really much higher in monetary terms than 5 percent for a lower-paid employee,” he added.

Salceda explained that the proposed version “saves the system from collapse, and ensures that we can fund pensions for the next ten years, at least.”

“Basically, it buys time for us to find better funding sources and benefits structures for the MUP pension,” Salceda said.

“Complex problems sometimes require simple solutions. This is one of such problems. By capping salary increases at a decent rate, we give the national government some predictability over the pensions and salaries it will owe,” he added.

JPV