Female candidate soldiers undergo drills as part of their basic Military training at the Philippine Army base at Camp O’Donnell, Capas, Tarlac in this undated file photo. — PHILIPPINE STAR/KRIZ JOHN ROSALES

By Luisa Maria Jacinta C. Jocson, Reporter

THE GOVERNMENT is looking to start requiring all active military and uniformed personnel (MUP) and new recruits to contribute to their pensions starting 2024, Finance Secretary Benjamin E. Diokno said.

“We can no longer afford this. Number one, it’s a big drain on our national budget. We’re providing protection to people who didn’t even contribute a single centavo to the pension,” he told reporters at the Department of Finance (DoF) office in Pasay City on Friday.

“You’re crowding out some important projects — education, health — because of the military pension. The idea of a pension is you contribute,” he added.

Asked on the timetable of the MUP pension reform, Mr. Diokno said Congress must approve the bill “as soon as possible.” He said personnel may start contributing to their pensions by January 2024.

“New recruits will start contributing to the system, those who are in active service will also contribute,” he said.

However, Mr. Diokno said there will be no diminution of benefits for those who are currently receiving their pensions.

In March, Mr. Diokno announced that President Ferdinand R. Marcos, Jr. will push for the passage of the bill seeking to reform the MUP pension program.

Mr. Diokno said the current pension system is not “fiscally sustainable.”

The government will need to spend an estimated P848.39 billion to finance the current pension system over the next twenty years, he said, citing a 2019 study by the Government Service Insurance System (GSIS).

Data from the Bureau of the Treasury (BTr) showed that there are P9.6-trillion total unfunded pension liabilities.

Mr. Diokno also said that the accumulating pension liabilities will likely increase public debt by as much as 25% by 2030.

“If we do not address the huge and rising unfunded liabilities of the current MUP pension system now, securing sufficient resources to provide for the benefits of future pensioners and their dependents will be extremely challenging,” he added.

The reform calls for a unified separation, retirement, and pension system for the MUP.

Under the current pension system, MUPs are automatically granted one rank higher upon retirement and can receive their pension after being in service for 20 years with no minimum pensionable age.

Their monthly pension is also automatically indexed to the salary of active personnel.

Most notably, MUPs do not contribute to their pension system. Instead, the pension benefits are drawn annually from the national budget.

As of 2022, the average monthly pension of a retired MUP is at around P40,000.

Data from the DoF showed that this was 8.8% higher than the average pension under the Social Security System (SSS) and 2.9% higher than the GSIS.

The government also spent P160 billion for MUP pensions in 2021, 38% higher than its spending on maintenance and other operating expenses and capital outlays.

“(This) can be allocated for other services, so we have fiscal space, more money for health, education, etc.,” Mr. Diokno said.

The proposed pension reform will increase the disability pensions on top of other benefits.

For example, for a disability rating of 25%, the proposed disability pension would be P2,500, and up to P10,000 for those with a disability rating of 100%.

Mr. Diokno said that he is meeting with National Defense Secretary Carlito G. Galvez, Jr., Interior Secretary Benjamin C. Abalos, Jr., and representatives from the Office of the President and the Department of Budget and Management this week to discuss the MUP reform.

Meanwhile, analysts said that a unified pension system will be more efficient.

Bienvenido S. Oplas, Jr., president of his own research consultancy and of the Minimal Government Thinkers, said that the old pension system puts the burden on taxpayers.

“While SSS and GSIS pensioners paid for the fund themselves via monthly salary deductions, the MUP pay zero, nothing — they keep all their monthly salaries and allowances from taxpayers, then their pension will be taken again from taxpayers,” he said in a Viber message.

Hansley A. Juliano, a political economy researcher studying at Japan’s Nagoya University’s Graduate School of International Development in Japan, said the MUP pension reform will help streamline expenses, but noted its potential consequences.

“Now this would not be an issue if the streamlining would lead to a lump sum that is at least close to what current veterans and servicemen are getting. However, if this is essentially an austerity excuse and you’re slashing them to a third of what they are getting, you’re basically stoking resentment here,” he said in a Facebook Messenger chat.

“You’re basically setting up the lower ranking retirees for precarity or flat-out poverty if you are reducing what they have. Why slash the general pot and not cut somewhere else?” he added.

Chester B. Cabalza, founding president of Manila-based International Development and Security Cooperation, said there should be a review of the pension system due to “differences” among the the military forces.

“The objective is good for the unified pension system but is it achievable for the interest of the uniformed officers and personnel? Although there are best practices among MUP agencies since most of them are members of unified loan associations like the Armed Forces and Police Savings and Loans Association, Inc. (AFPSLAI), this gives us a better overview that a unified pension system can be done urgently,” he said in Facebook Messenger chat.

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