THE Marcos administration plans to spend over P160 billion for the military and uniform personnel (MUP) pension, gratuity and terminal leave benefits next year, which is nearly P5.7 billion higher than what it allocated this year.
Based on the 2024 National Expenditure Program (NEP), the executive branch is proposing a P164.087 billion funding for the MUP pension, retirement gratuity and terminal leave.
The amount is 3.6 percent over this year’s P158.387 billion budget allocation, according to state budget documents.
See related story in Banking, “Features of MUP pension reform bill bared.”
Bulk of the proposed fund will finance the pension of MUP and veterans amounting to a total of P140.679 billion, based on Chapter 42 of the 2024 NEP. Of the amount, about P129.821 billion would go to the pension of MUP while P10.857 billion will fund the pension of veterans.
The proposed budget for next year’s MUP pension is slightly higher than the P128.656 billion allocated this year. The veterans’ pension, meanwhile, has the same amount of budget for 2023.
The 2024 NEP showed that P23.408 billion be allocated for the retirement gratuity and terminal leave of MUP, 24 percent higher than the P18.873 billion budget this year. Broken down, it allots P10.306 billion to retirement gratuity and P13.101 billion to terminal leave benefits, budget documents showed.
Economic officials have earlier announced that the passage of the MUP pension reform would free up the national government’s scarce budget resources that could be used to bankroll other programs of the state such as construction of schools.
Department of Budget and Management (DBM) officials said the proposed MUP fund for next year would not be automatically deleted should the government pass a legislation reforming the fund.
There will be a transition period before the new MUP pension fund system fully takes effect, which would also depend on the final law that will be passed, DBM added.
Finance Secretary Benjamin E. Diokno earlier reiterated that undertaking the military pension reform would be a “game-changer” as it will open up a lot of fiscal space in the national government’s budget.
The Department of Finance (DOF) also earlier announced that the MUP pension fund will be managed by the GSIS as part of the economic managers’ reform proposal.
The DOF disclosed that the monthly premium of the reformed MUP pension fund would be invested by the GSIS to allow the fund to grow in order to achieve “required return of 85 to 90 percent of pension upon retirement” of MUPs.
The DOF said the economic team would soon provide the “computations on the net take home pay, as well as the net payout of all retirement options” of MUPs under the proposed reforms.
Based on the previous actuarial study conducted by the Government Service Insurance System in 2019, the national government would spend about P850 billion annually in the next 20 years to finance the current MUP pension system—figures that, DOF warned, would result inevitably in a fiscal crisis.