MANILA, Philippines — Finance Secretary Ralph Recto is pushing for changes in the pension scheme of military and uniformed personnel (MUP), but only for new entrants, in yet another deviation from his predecessor.
In his first briefing yesterday as head of the Department of Finance (DOF) and the government’s economic team, Recto said the state has a social contract with MUP, but also emphasized the need for them to contribute.
He shares the same stand as his predecessor, now Monetary Board member Benjamin Diokno, but only to some extent.
“We promised them (MUP) a certain pension and so I think the government should respect that,” Recto said.
“But what we can do for the reform is that all new entrants will have a different pension system similar to what civilians have.”
Last September, the House of Representatives approved on second reading the MUP bill, but removed a key provision that would require active members to contribute.
This is the exact opposite of what Diokno previously pushed for, wherein active members and new entrants will both contribute to their pension.
“There should still be a contribution system moving forward. There also might be an opportunity that certain government assets or assets owned by the Armed Forces of the Philippines could be used to pay for the pension partially,” Recto said.
“At the same time, maybe those assets are idle and the government and private sector can develop these assets. So you hit two birds with one stone there,” he said.
Earlier estimates from Albay Rep. Joey Salceda showed that exempting the active MUPs from contributing would cost the government some P934 billion for 35 years or until 2058.
Sen. Jinggoy Estrada is leading the MUP reform effort in the Senate.
At present, MUP enjoy the benefits of a pension system even without any contribution to the fund. As such, the government appropriates a budget annually to finance the pension.
The DOF’s version proposes a guaranteed annual salary increase of three percent for MUP for 10 years and an adjustment of the mandatory retirement age from 56 to 57 years old or upon accumulation of 30 years of service, whichever comes later.
It also covers the establishment of two separate trust funds: the Armed Forces of the Philippines Trust Fund and the Uniformed Personnel Services Trust Fund.
The bill also calls for the creation of the MUP Trust Fund Committee to oversee the MUP trust funds, with the Bureau of the Treasury serving as the secretariat of the committee and the Government Service and Insurance System (GSIS) as the fund manager.
Latest GSIS actuarial study showed that the unfunded liability of the MUP pension is now at P14 trillion, up from P9.6 trillion in 2019.
This is based on 437,457 active members as well as 268,741 regular and survivorship pensioners, as also submitted by the MUP.