Veterans' pension hike to up cost of PNP, AFP pay increase

MANILA, Philippines -- Military retirees and veterans are bound to receive higher pensions once President Rodrigo Duterte approves a hike in basic pay of those in active service, costing the government more than initially estimated. 

"For now, we already allocated P27.3 billion for the increase... For the pension, we are yet to estimate the costs. We need to ask the bureaus," the public information office of the Department of Budget and Management said.

Last Tuesday, the DBM said it submitted a proposal to Malacañang to raise the base pay and some allowances of uniformed personnel by more than a fifth effective this year.

The proposal will still be subject to congressional concurrence.

Nevertheless, the budget agency said allocation for the increase worth P27.3 billion had been provided for in the 2017 outlay under the Miscellaneous Personnel Benefits Fund.

But the DBM PIO said this does not include costs for the increase in retirees' pensions, which have been indexed to the base pay of those in active service.

According to early DBM data, the government was estimated to shell out P73.9 billion for pensions of 210,816 retirees coming from the military, police, coast guard and fire bureau.

The figure is up 4.08 percent from last year's estimated P71 billion. The 2017 cost will inevitably rise as a result of the current proposal.

This, in turn, could result in an additional burden for the government, which Budget Secretary Benjamin Diokno himself recognized when he took over in July last year.

"This is really our big problem and we really need to address this because there may come a time that pension alone may occupy 80 percent of the (military and police) budget," Diokno said then.

Without the proposed pay increase, compensation for active military and police personnel will increase a slower 0.61 percent this year to P99.3 billion, data showed.

In September, President Duterte issued Executive Order 3 that raised the combat pay of those in the ranks after Diokno said in July the government cannot afford a base pay increase because the pension is indexed to such.

He had said the Duterte administration wanted to reform the military pension system to put them under the Government Service Insurance System, the pension fund for government workers.

The potential hike in military retirees' pensions came after economic managers, including Diokno, opposed a P2,000 across-the-board pension hike for retirees under the Social Security System, the private sector workers' pension fund.

A joint congressional resolution is pending before Duterte's desk and the president has indicated he is not likely to sign it after his Cabinet flagged risks of early fund depletion without a member contribution increase to 17 percent from 10 percent.

Both the military pay and SSS pension increases were Duterte's campaign promises.

Unlike military pensions, those for SSS members are funded by contributions, not the national budget.