M.U.P. Pension Reform Bill tossed to T.W.G. continued


THE Senate Committee on Defense and Security referred to a technical working group the controversial bills governing the military and uniformed personnel (MUP) pension reforms, that have pitted the Finance department against several agencies over a looming “fiscal crisis” from the burgeoning pension requirements.

Suspending the hearing on Monday, Sen. Jinggoy Estrada said that, given all the contentious provisions and arguments from stakeholders, he would rather “take our time” to thoroughly vet the pending measures from the House and the Senate.

Estrada indicated they would not aspire to finish the bills before Congress adjourns in June, saying: “We need to strike a balance that is acceptable  to everybody.”

Speaking partly in Filipino, Estrada said, “I don’t want to rush this. I know we won’t be done by the first week of June when we adjourn.”

The Senate is tackling Estrada’s Senate Bill 284, providing for Military and Uniformed Personnel (MUP) Services Separation, Retirement and Pension Act of 2022.

“There is no room for mistakes here. If this commitee makes a mistake…I do not want to rush things, I will refer this to a technical working group,” Estrada said, adding: “Maybe when we resume, after the SONA [State of the Nation Address], then we can discuss this bill already.”

Also at the hearing, Sen. Ronald dela Rosa, a former National Police Chief-turned lawmaker, appealed to executive agency chiefs to avoid fingerpointing leading to miscoordination.

He also asked the Finance Cabinet cluster to avoid putting the onus on the security sector, and making it appear as if they will cause the feared “fiscal collapse.”

Senator Bong Go said he understands the concern of fiscal managers, but said the MUP should not be treated like a “bigay-bawi” setup, whereby what has been committed would be taken back by government, invoking its fear of bankruptcy.

Administration senators Go and dela Rosa both stressed that the sacrifices of uniformed personnel involve “blood” because they put their lives on the line to defend the nation and allow it to live in peace and order.

For his part, National Defense officer-in-charge Secretary Carlito Galvez Jr. said notwithstanding the restiveness reported to have been stirred by moves to tweak the pensions, “the men and women of the AFP remain true to their oath” to defend the republic at all times.

He assured lawmakers they are “open” to changes in the system “as long as these are fair” to the military and uniformed personnel, and based on correct principles of actuarial science.

Diokno warning

Finance Secretary Benjamin Diokno has been warning that unless the measure is passed, the government faces a “fiscal disaster” because of the burgeoning needs of current pensioners and future retirees in the uniformed ranks.

At a Palace briefing in March, officials led by Diokno had said the Marcos administration is eyeing to implement reforms in the MUP retirement and pension system to avoid a “fiscal collapse” as the national government had been badly stretched by the Covid-19 pandemic.

In that briefing, Finance Secretary Diokno said President Marcos expressed support for four proposals:

First, the reform will apply to all active personnel and new entrants. Second, the automatic indexation of pension to the salary of active personnel of single ranks will be removed.

Third, military and uniformed personnel will receive their pension starting at 57 years old, not automatically after 20 years of service.

Fourth, mandatory contributions will be required for active personnel and new entrants similar to the Government Service Insurance System (GSIS) pensioners.

At Monday’s hearing, however, some officials appealed that the reforms apply only to new entrants.

Diokno had noted in March that the current pension system is non-contributory–meaning, retirement pensions and benefits are fully funded by the national government through annual appropriations despite having no contribution from the retirees. This, he explained, worsens the fiscal burden of government.

Under the proposed pension scheme, he said “all those who are in active service and the new recruits will have to pay.”

Justifying removal of the automatic indexation of pension to the salary of active personnel of similar ranks, Diokno said, “In other words, if you are a retiree [and] if you are a general getting X amount of money, if the salary of the incumbent is doubled, you get your pension doubled also,” he said.

“We have to really address that issue. It’s not sustainable. I said, if this goes on, there will be a fiscal collapse,” he said then.

Asked how much military and uniformed personnel will be contributing to the new MUP pension system, the DOF chief said it will be a “gradual” contribution.

For the first three years, their contribution is 5 percent of the salary and the contribution of the national government will be 16 percent.

For the next three years, it will be increased to 7 percent and the NG share will decline to 14 percent. “Years thereafter, the MUP share will be increased to 9 percent and NG 12 percent,” he added.

Butch Fernandez, with PNA report