House exempts active MUP from contributing to pension

MANILA, Philippines — The House of Representatives yesterday approved on second reading the military and uniformed personnel (MUP) pension system reform bill, but removed a provision requiring active members to contribute to their pension.

During a plenary session, the House approved other amendments including mandating new entrants to contribute nine percent of their base pay as their “personal share” while the government will give 12 percent.

Sponsored by Speaker Martin Romualdez and Albay Rep. Joey Salceda, the bill seeks to create a “sustainable fiscal framework for the pension system of the MUP, providing mechanism for the disposition of government assets” to fund the program.

Salceda admitted that exempting the active MUPs from contributing to their pension would cost the government some P934 billion for 35 years or until 2058.

He said they expect the pension system’s trust fund to be self-sustaining by 2058.

Salceda, chair of the ad hoc committee on the MUP pension system, said the 35-year period was estimated by “assuming” that the age of new entrants is 22 years old and they will retire at the age of 57.

Kabataan party-list Rep. Raoul Martin commented that the government would have close to P1 trillion in people’s taxes if the active MUPs would be made to contribute to their pension.

The approved version of the MUP bill also provides for the assets of the Armed Forces of the Philippines (AFP) to become additional sources of funds for the trust fund.

This pertains to the proceeds of the residual assets of the AFP retirement separation benefit system; sale, lease or joint development of military reservation; income derived from public-private partnership entered into by the Department of National Defense and non-strategic real estate assets of the DND or the AFP.

The bill also imposes “compulsory retirement” if the MUP meets at least one of certain conditions such as reaching age 57

or upon accumulation of 30 years of “satisfactory active service” and for key officers, upon completion of tour of duty or upon relief by the president.

Salceda thanked the MUP agencies for their support during the plenary deliberations and for agreeing with the committee and the economic managers on the need to move forward for fiscal improvements on the system.

“There is no longer any debate between the MUP agencies and the economic managers that we need this reform. There is also no debate that the military and uniformed personnel deserve some degree of retirement protection from the state they protect,” he said.

Salceda said the consensus bill hurdled the House because it is fiscally, politically and morally acceptable.

“The ball is now in the Senate’s court, and my counterpart, Sen. Jinggoy (Estrada), has insisted on the need for reform. That is a welcome shift in direction compared to the past Congress,” he said.

Salceda expressed hope that the AFP would be true to its word in contributing assets to the AFP pension trust fund.

“I especially look forward to having the assets of the RSBS infused right away,” he said, referring to the retirement and separation benefit system of the AFP.

Salceda said some of the key provisions in the proposal is the full indexation with a provision for adjustment during adverse fiscal conditions and a guaranteed salary increase of three percent per annum over 10 years, “which is already a sacrifice willingly made by the MUPs, given the historical salary rate increase of 12 percent.”

The others are the creation of two trust funds, one for the AFP which will infuse at least P44 billion in assets to the fund, and another for uniformed services; uniform retirement benefits for total permanent disability and provisions for assistant for indigent military retirees.