MANILA, Philippines — Around 70 to 80 percent of military enlisted personnel are looking at availing themselves of optional retirement to lock in their benefits as the government continues to call for a new pension system, according to Defense officer in-charge Carlito Galvez Jr.
At a Senate hearing yesterday, Galvez said he went around various military offices and installations in the country to get the sentiments of soldiers on the pension-related bills in the Senate as well as the proposal from the executive branch for changes in the retirement age and the imposition of pension contributions from military and other uniformed personnel. He said the MUP’s plan for optional retirement surprised him.
“We would like to appeal to our honorable senators that we should really look for a possible middle ground where the morale and welfare of our people will be taken care of… the assurance of a modest life upon retirement,” Galvez said.
The current MUP pension system is fully funded by the national government through the annual budget with no
contributions from uniformed personnel. The amount of pension is automatically pegged to the current salary of the personnel of similar rank in active service and an MUP is automatically granted one rank higher upon retirement.
Because of this, it is estimated that the annual budget for MUP pensions is larger than the yearly allocations for salaries of the personnel in active duty.
National Treasurer Rosalia de Leon warned the funding requirement to pay for MUP pensions has been growing at a “fiscally unsustainable rate” that the unfunded liabilities are already estimated at P9.6 trillion – representing some 53.4 percent of the country’s Gross Domestic Product in 2020 based on a study done a few years ago.
De Leon said the current system is highly susceptible to shocks and is unstable and unsecured.
The executive branch is proposing that the MUP pension system reforms cover both active personnel and new entrants, with them making contributions for the pension.
This proposal, according to De Leon, also includes an increase of up to 1.5 percent in a given year subject to economic conditions and the actuarial life of the pension.
But Brig. Gen. Ross Alvarado of the Philippine National Police Directorate for Comptrollership expressed opposition to the inclusion in the reforms of those in active duty, saying the new pension system should be applied only for new entrants.
Representatives from the Philippine Coast Guard, Bureau of Jail Management and Penology, Bureau of Fire Protection and the Bureau of Corrections also opposed the plan to have those in the active service contribute to the pension.
Along with the National Mapping and Resource Information Agency, their representatives appealed for what they called a fair compromise to resolve the MUP pension problem, which the Marcos administration warned could trigger a fiscal collapse.
They wanted the government MUP pension reform to cover only the new entrants and that any drastic change to the current non-contributory system would lead to a demoralization and mass exodus from the Armed Forces and other uniformed services.
Galvez said that while the Armed Forces fully support moves to put up a new pension system, the government should take into account the morale of troops, who risk their lives in the performance of their duties.
“The mere notion of modernizing our pension system created already some sort of apprehension… on proposals relating to retirement benefits, the position of the pensionable age has already affected the morale and cause uneasiness not only from within the active ranks of the Armed Forces, but even from our veterans and retirees,” Galvez told the committee on national defense and security chaired by Sen. Jinggoy Estrada. – Louise Maureen Simeon