MANILA, Philippines — Defense officer-in-charge Carlito Galvez Jr. said Monday that President Ferdinand “Bongbong” Marcos Jr. is “very much concerned” over the potential impact of reforms to the pension program for uniformed personnel that his own administration is proposing to avert a “major fiscal collapse.”
“The president also gave an instruction that he is very much concerned on the impact of this [Military and Uniformed Personnel pension] on the morale and welfare of our personnel and policemen. And he wanted that there should be a continuous discussion to have a common ground,” Galvez told Senate panels at the start of hearings on the proposed MUP pension reform.
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Economic managers are pushing to overhaul the pension program for the security sector, which covers retired military, police and coast guard personnel, firefighters, jail and prison guards, and retirees of the Philippine Public Safety College.
Data presented by the Department of Finance during the Senate hearing showed that the share of unfunded MUP pension liabilities in the gross domestic product of the country in 2020 stands at more than half, at 53.4%.
“It’s not sustainable. If this goes on, there will be a fiscal collapse,” Finance Secretary Benjamin Diokno said in a release in March.
“We are already spending significantly on pension liabilities than in keeping our military and uniformed services safe, competent and in fighting shape,” National Treasurer Rosalia de Leon said on Monday.
Sen. Jinggoy Estrada, Senate defense panel chairperson, acknowledged that the requirements to fund the MUP pension have “ballooned immensely” and “require our immediate action.”
“While we recognize the important role and peculiar nature of work of our soldiers, policemen and women, and uniformed officers being exposed to constant risk and danger, we are also mindful of the enormous burden of the existing MUP pension system to the nation’s coffers, especially to the taxpayers, as it is fully funded by the government,” Estrada said.
Estrada sent the pension reform bills to a technical working group after just one hearing.
He said, however, that the proposal cannot be rushed as he called on the uniformed services and economic managers to coordinate with each other to thresh out their issues.
Apprehension, uneasiness
Under the Marcos Jr. administration’s proposal, which Diokno said has been approved by the defense and interior departments, all active and new recruits will be required to contribute towards their pension fund.
Pensions will no longer be indexed to the salaries of active personnel and pensions will be handed out starting at 57 years old.
But Galvez said that while the DND and the AFP “fully support” the enactment of laws to address issues hounding the pension system, they appeal that “the moral and welfare of our soldiers be given due weight in this deliberation.”
“At present mere discussions of proposals related to retirement benefits, most especially the imposition of the pensionable age, has already affected the morale and caused uneasiness not only from within the active ranks of the Armed Forces, but even from our veterans and retirees,” he said.
Representatives of other uniformed agencies present during the hearing also said that they support reforms to the pension program, but all expressed reservations with its current form as proposed by the Marcos’ administration’s economic managers.