Diokno: Military pension reform to be passed before end of 2023

MANILA, Philippines — Pending reforms to the pension system of retired military and uniformed personnel are set to be passed before the year ends, as Finance Secretary Benjamin Diokno expects the move will clear some fiscal space. 

Diokno, addressing a forum after President Ferdinand Marcos Jr. delivered his second annual address to Congress, said the impact of these reforms will be felt by as early as January 2024. 

The Marcos Jr. administration is faced with the gargantuan task of reforming the pensions of military and uniformed personnel, which Diokno already said was 9 times higher (P4,528) than what retirees under the Social Security System receive, and 3 times (P13,600) than what Government Service Insurance System pensioners get. 

Retired military and uniformed personnel get an average monthly pension of P40,000. 

“If my numbers are right, in 2024 we have allocated something like P300 billion,” Diokno said on Tuesday. 

If realized, the reforms would clear fiscal space in the country’s annual budget, as taxpayers continue to shoulder the massive debt load taken on by the Duterte administration for its pandemic response. As it is, Diokno said in March that the situation was already “bleak.”

“As we explained to them, this is for their own good, to make the pension system more sustainable in the future,” he said. 

Former president Rodrigo Duterte signed a law in 2018 mandating pay increases for the military and the police. A year later, the Duterte administration sought the assistance of Congress to pass legislation aimed at reforming the pension of these same personnel.

Diokno explained the three types of beneficiaries targeted for this reform. Retired personnel will not be asked to contribute, since the state held a “contractual obligation to them” while those in active service will be asked to pitch in “gradually” with new recruits tasked to pay the full amount. 

The MUP reform is an ongoing concern for the Marcos Jr. administration, listing it among legislative measures that were a priority for Congress. The proposed reform to the system figured in the president’s state of the nation address on Monday. 

As it is, the defense department is already eyeing the sale of land and property assets to generate funds to bankroll the retirement pension of military personnel. One of the first marching orders of the new defense chief, Gilbert Teodoro, was to “fix” the military’s pension system.

The Marcos Jr. administration already conducted a series of consultations with military and police personnel, numbering nine meetings as of June. 

“The results of the consultations have been very encouraging,” Diokno said. — Ramon Royandoyan