MANILA, Philippines — The Marcos Jr. administration is keen to push the passage of much-needed reforms on pension benefits for military and uniformed personnel (MUP), saying that costly payments could threaten the country’s fiscal health.
In a noontime Malacañang briefing on Tuesday, Finance chief Benjamin Diokno laid bare the proposed reforms, which already received nods of agreement from the defense and interior departments.
- The reform would apply to all active personnel and new recruits.
- Removal of automatic indexation of pension to the salary of active personnel of similar rank.
- Pensions will be handed out starting at 57 years old.
- Mandatory contributions will be required from active personnel and new recruits, similar to GSIS pensioners.
The proposals come at a time when the country’s fiscal health is in dire straits, considering the massive debt load taken on by the Duterte administration for its pandemic response. As it is, Diokno noted that the situation was already bleak.
“So there will come a time that the current budget will only be a third or a quarter of the money that we’re paying to pensioners. It’s not sustainable. If this goes one, there will be a major fiscal collapse,” he said.
For context, Diokno said that retired military and uniformed personnel get an average monthly pension of P40,000. This is 9 times higher (P4,528) than what retirees under the Social Security System receive, and 3 times (P13,600) than what Government Service Insurance System pensioners get.
Diokno likewise explained the formula for these monthly contributions, which depend on the personnel’s salary. In the first three years, MUPs will contribute 5% of their salary, while the national government will contribute 16%. For the next three years, contributions from MUP scale up to 7% while shares from the state decreases to 14%.
Years after that, MUP contributions will increase to 9% while the state contributes at a lower share of 12%.
The reforms would still need to pass scrutiny in both houses of Congress, but Diokno said they’ve already talked to some legislators that will push for these reforms.
“I think they understand they need to cooperate with the rest of society otherwise the deficit will balloon,” Diokno added. — Ramon Royandoyan